How a boom in craft distilleries is changing Texas' spirits scene

AUSTIN (KXAN) — In the back of their warehouse space, surrounded by whiskey-filled barrels stacked four high, employees at Austin's first whiskey distillery filled, capped, labeled and packed bottles of their latest offering, a rye gin, on Wednesday.

Still Austin Whiskey Co., which was issued the first whiskey distilling permit within city limits since prohibition, has been open to the public for the last nine months, operating out of a mixed-use development in south Austin called the Yard. 

"It's an exciting time because, you know, Austinites love to drink," said the distillery's co-founder, Chris Seals. "And so we've got a great market."

An economist by trade, Seals started the venture when his retired dad came looking for a partner. With his finance background, he knew the proposal was risky.

"I told him, 'Sure, I'll help you 100 percent,'" Seals said, "because I thought we were just going to drink a lot of whiskey together and have a really good time doing a feasibility study on how to open a whiskey distillery."

Andrew and Lisa Braunberg and Sal and Joanna Salinas joined the project as well, and what followed was nearly four years of clearing hurdles and navigating red tape. It culminated in the opening of their tasting room in September. 

They're part of a bigger wave of Texas craft distilling that's changing the liquor landscape in the Lone Star State. In the last eight years, the state has seen an eightfold increase in the number of permits issued to distillers, according to Texas Distilled Spirits Association, or TDSA.

In 2010, the trade group counted 17 permits statewide; halfway through this year, there are 131 permits to make liquor in Texas, and retailers are seeing the difference.

At Austin-based Twin Liquors, the number of Texas whiskeys on the shelves is significantly higher than it was just a couple years ago. The manager at the store on South Lamar Boulevard said he's carrying six times as many brands of Texas whiskey as he was two years ago.

"All this Texas stuff is starting to encroach in, like, Kentucky world," Kris Kinnard said, motioning to the wall of whiskey separated into the smaller-batch products from Texas and the big-name, big-batch behemoths.

But the trend toward local distillers encompasses far more than whiskey. In fact, the entire industry started with Tito's Handmade Vodka in Austin in 1995, TDSA president Mike Cameron said.

Now central Texas boasts several well-known vodkas, and craft gins and rums made in the state are starting to make their way to shelves. "We're seeing the future and, you know, the footprint being made is only going to get bigger," Kinnard said.

The next couple years will likely be good ones for local distillers, Cameron said, thanks to a major change to excise taxes included in the federal tax overhaul passed in December. 

Tax rates fell from $13.50 per gallon of distilled spirits for the first 100,000 gallons to just $2.70 per gallon, and Cameron believes that convinced some prospective Texas liquor-makers to get into the industry in the first place.

But those tax cuts only last for two years, and he worries that some distillers may have to close their businesses if and when they increase again.

Likewise, Seals said there are certain legislative hurdles that still make it difficult to get into the distilled spirits industry in the first place. For instance, he'd like to see state lawmakers ease restrictions on shipping liquor.

"I think that the states that lead the way in making that more accessible will definitely be the winners," he said. 

Meanwhile, he's happy to keep distilling whiskey and gin  for the locals as he and others across the state take on the Kentucky distillers that continue to dominate the marketplace.

"Not to say that we don't like a good scotch or we don't like a good Kentucky bourbon," Seals said. "But we are Austin, and we want to have something that really reflects who we are."    

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