In 2010, St. George Spirits was riding high. Its most well-known brand, Hangar One vodka, had reached national distribution and annual depletions of 37,000 cases—a big number for a craft distiller. That same year, the Alameda, California–based distillery sold the brand, which comprised a large majority of St. George’s volume, to Proximo Spirits in a deal that transformed the company.
“It’s always tough to let go of something you’ve poured your heart into,” says master distiller and sole proprietor Lance Winters. “But the sale allowed us the creative flexibility and the resources to play around with other things.” The company has used that freedom to develop one of the broadest portfolios of any craft distiller while winning acclaim as the leader of the burgeoning craft spirits movement.
Elder Craftsman
St. George, one of the oldest craft distillers in the country, didn’t start off making vodka. In fact, the company celebrated its 20th anniversary before introducing Hangar One. In 1982, while visiting the United States on behalf of the German ministry of culture, St. George founder Jörg Rupf fell in love with the Bay Area and launched the company to distill local fruit into eau-de-vie. “He had one 65-gallon pot still in a little shack in Emeryville, California, and he started making pear, raspberry and cherry eaux-de-vie,” Winters says. “His family had been distillers and brewers in the Black Forest for generations, and he knew quite a bit about it already.” The U.S. market for eau-de-vie was nonexistent, and St. George’s early years were lean. Around 90 percent of sales came from exports to Germany, where the company’s offerings had won a number of awards. “Jörg kept at it,” Winters says. “Just because somebody doesn’t get your art form doesn’t mean it’s not a valid art form.”
Rupf developed a reputation for mentoring other distillers, including Steve McCarthy of Oregon’s Clear Creek Distillery, Lance Hanson of Colorado’s Peak Spirits Farm Distillery, and Louis and Margaret Chatey of Connecticut’s Westford Hill Distillers. “There’s a reason that Jörg is considered the godfather of American artisanal distillation, and it’s because he really got people started,” Winters says. One of Rupf’s trainees was Winters, who joined St. George in 1996 after spending eight years in the Navy as a nuclear engineer. “I told Jörg that I wanted to make single malt whiskey and would love to work at the distillery,” Winters recalls. “Jörg said, ‘We’ll try you out for a month and see what happens.’ That was 19 years ago.” Winters learned to make eau-de-vie, but that was just the beginning. “Jörg really taught me the methodology of distillation and a love for the craft,” he says.
St. George reached a turning point when it introduced Hangar One in 2002. “I saw all these flavored vodkas and thought they were terrible,” Winters says. “Their taste profiles led with alcohol and maybe a hint of flavor.” He realized that the same techniques St. George used for eau-de-vie could be applied to making flavored vodka. “The core philosophy behind distilling an eau-de-vie is that you find a raw material you love and guide it through the process so all the things you loved about the ingredient are still there in the glass,” he explains. The experiments became Hangar One, which he distilled from fresh fruit and Viognier grapes in eau-de-vie pot stills.
The brand became a major success. “We had been around for 20 years, but very few people knew who we were,” Winters says. “Hangar One put us in front of people and allowed us to grow in amazing ways. It gave us the opportunity to teach people about our philosophy and approach.” Proximo’s 2010 purchase of the brand, which St. George continued to produce on contract until last year, allowed the newly prominent distillery to bring its other products to a much wider audience. The acquisition also allowed Rupf to retire and Winters to take over as sole proprietor.
Diverse Distilling
Since selling Hangar One, St. George has expanded its portfolio with more than a dozen offerings. Created by Winters and distiller and blender Dave Smith, the spirits are produced in a 65,000-square-foot hangar using one of the company’s four main copper pot stills. In 2010, St. George introduced its new flagship gin range: Terroir, which features ingredients harvested from the nearby Mount Tamalpais, including
Douglas fir; Botanivore, a blend of three distillates comprising 19 botanicals; and Dry Rye, a gin with an unaged rye whiskey base (all $35 a 750-ml. bottle or $35 for a variety pack of three 200-ml. bottles). “The gins are the bulk of our sales,” says national vice president of sales Steve Ciavola. The offerings are also a major growth engine, with volume increasing roughly 40 percent in 2014 (the company declines to reveal specific numbers). “Terroir and Botanivore are neck-and-neck in most markets, and our combo pack does extremely well, particularly during the holiday season,” Ciavola says.
St. George absinthe ($59.99 a 750-ml. bottle), the company’s other top sales priority, was the first domestically produced absinthe launched after the ban on the spirit ended in 2007. Made with traditional ingredients like fennel, anise and grand wormwood, along with meadowsweet, stinging nettles, opal basil, hyssop and other unusual botanicals, the spirit had long been a passion project for Winters. In the 1990s, he started producing small batches of absinthe on one of the company’s test stills. “It was perfectly legal to make it, but at the time it wasn’t legal to sell it,” he explains. “When it was legalized, we already knew what it took to make a good absinthe.” Ciavola adds that the absinthe is an important piece of the portfolio, but notes that misconceptions about the formerly forbidden spirit still abound. “Sometimes, it’s a little hard to get people to taste it,” he says. “They’ll say they don’t want to hallucinate. That false perception is still there. Absinthe has a reputation, and selling it requires a lot of education.”
St. George also relaunched its line of eaux-de-vie last year. Now packaged as Raspberry and Pear fruit brandies (both $40 a 750-ml. bottle) and joined by Raspberry and Spiced Pear liqueurs ($35), which blend the brandies with fruit juice, the company’s oldest products are selling better than they ever have. “Calling the offerings brandies instead of eaux-de-vie makes them more understandable to people,” Winters says, also noting increased interest from mixologists. Other offerings include St. George California agricole rum ($50), Dave Smith’s Nola coffee liqueur ($35), and a limited-edition California reserve apple brandy that’s aged in French and American oak ($55). “I absolutely love the rum, but it’s the single most polarizing product we make,” Winters says, explaining that the funky flavor profile can alienate consumers who normally drink lean, neutral rums. “There just aren’t that many agricole drinkers right now,” he adds. “But I’ve picked up some of Jörg’s stubbornness and I’m just going to keep making it. Maybe someday people will catch on; maybe they won’t.”
The company’s single malt whiskey, which is blended by Smith and released in lots of around 500 six-bottle cases a year, has won particular acclaim—the newest release, Lot 14 ($80), was named “Craft Whiskey of the Year” by Market Watch sister publication Whisky Advocate in 2014. Demand for the whiskey, which is St. George’s most limited product, has increased dramatically in the last few years. “It used to take a year and a half to sell 500 cases,” Ciavola says. “Last year, it took 45 days. We allocate it right down to the bottle.” The company is ramping up production, but it will be a slow process. “I really hope we can take it off allocation someday,” Winters says. “We make these things so we can share them with people.”
On The Ground
The St. George range is available in around 30 states, a significant increase from a few years ago. “We’re looking at going into more markets that this year, but we’ve been carefully managing our growth so we don’t overextend ourselves,” Ciavola says. The company does well in major markets, especially California, along with some smaller areas like Georgia, Massachusetts and Tennessee. Most marketing is grassroots, with a strong emphasis on social media, which is handled by Winters’ wife, Ellie Winters. Most of the marketing spend goes to sampling, as well as p-o-s materials. “I think the most important thing we provide is the ability for the distributor salespeople to sample everything,” Ciavola says. “We sample, sample, sample.”
Traditionally, St. George has seen the bulk of its on-premise support from cocktail bars. “We’re very close to the mixology community—there’s a lot of communication with those folks when we get ready to do something,” Ciavola says, noting that the company has recently seen an uptick of support from fine dining and national accounts. “Everybody’s hearing all the craft noise out there. They’re very receptive to bringing on craft spirits.” St. George has also done well in the off-premise, especially with its gins. “The retail community has been very supportive,” Ciavola adds. “Most retailers take all three gins.”
K&L Wines, a three-unit beverage alcohol retail chain in California, carries nearly the entire St. George range. “When it comes to craft spirits, people ask, ‘Does it taste better? Is it different or exciting or interesting?’” says K&L spirits buyer David Driscoll. “For St. George products, the answer is yes. It’s a slam dunk across the board.” His best-seller is the Terroir gin ($30.99 a 750-ml. bottle). “We sell about a case of that a day,” Driscoll says, noting that people in the Bay Area like the product’s story. “It’s made locally, and the ingredients are local.” K&L has also partnered with St. George to produce Faultline gin (usually around $35). The batches are different every year, and past versions have been flavored with celery salt, smoked orange peels, and grapefruit and sage. Driscoll notes that St. George’s allocated products, such as the whiskey and apple brandy, rarely even make it to the shelves. “I put them on our email list, and they’re gone within an hour,” he explains. The St. George range also does well off-premise outside of the Bay Area, although Ciavola admits that some items can present challenges. “The agricole rum is definitely a hand-sell item,” he says. “The gins do sell better when someone on the floor can talk about the brands, but we’re in a lot of stores where they don’t have that level of customer service and our turnover is very good.”
Future Plans
St. George has grown at more than 40 percent annually for the last few years, and Winters believes it’s just the beginning. “The craft category is on the cusp of going mainstream,” he says. “Right now, the people who are into it are the mixology community and serious booze nerds. But it’s going to get to the point very soon where you’ll see it in chain restaurants and in more supermarkets. The same thing happened with coffee and with beer. It’s on the way to happening with artisanally produced spirits.”
This year, in addition to launching a smokier whiskey expression with a different grain base, St. George is introducing a product it hasn’t offered since selling Hangar One: vodka. “We went back to our roots in eau-de-vie,” Winters says. Launching this month, the St. George vodka line includes three expressions ($30 a 750-ml. bottle): St. George All Purpose vodka, an unflavored offering distilled from pears; California Citrus vodka, made with bergamot and Seville and Valencia oranges; and Green Chile vodka, comprising jalapeño peppers, Serrano peppers, red and yellow bell peppers, and cilantro. “I feel confident that our house style delivers more mouth feel than most people end up with,” Winters says.
For the long term, St. George sees a clear path ahead. “We’ll continue to do what we do,” Winters says. “The fun part is the challenge of maintaining our position as the leader in the craft segment while making sure we’re holding that role the right way.” In the meantime, Winters will keep practicing his philosophy of the distiller’s art. “Nothing is out of bounds,” he explains. “We’ll go wherever our imaginations lead us.”