It all started 10 years ago—an unlikely distillery housed in a former welding shop under a bridge in a once-sleepy Texas town. It produced the state’s first whiskey to hit the market since Prohibition. Since then, Balcones Distilling has made a name for itself with a range of bold whiskies and other spirits with outsized Texas character. “Everything we do begins and ends with a curiosity about whiskey, and brown spirits in general,” says Jared Himstedt, head distiller at Balcones. “Through every step in the process, we do the best we can—with the best equipment, running it a certain way, trying everything, and paying close attention. And we never stop being curious.”
As Balcones embarks on its 10th anniversary this year, the company is now running at full steam and eyeing opportunities for expansion. In early 2016, Balcones began production at its new 65,000-square-foot distillery in the historic Texas Fireproof Storage building in downtown Waco. The location will allow the company to finally keep up with high demand and provides the space needed to continue the kind of experimentation it’s known for, while producing about 25 times the amount of spirits once made at the original distillery.
The local landscape surrounding Balcones has changed over the years as well, with its hometown of Waco seeing a sudden surge in tourism. The new Balcones distillery is down the street from the popular Magnolia Market at the Silos, which sees about 20,000 visitors each week, in addition to being a stop on the city’s free Silo District Downtown Trolley tours. Since opening its doors to the public late last year, Balcones has been hosting a steady stream of visitors at its retail shop and tasting room.
While Balcones has grown along with its home base, it has also proven its staying power in an increasingly crowded craft spirits market. “We’re in it for the long term, and we’re confident we’ll manage that,” says Balcones president and COO Keith Bellinger. “We choose the highest-quality ingredients, barrels, packing, and materials. Everything we sell, we make from the start—grain to glass.” Such commitment to the process, from its ingredient sourcing to its production methods, has distinguished Balcones as a true Texas spirit.
Before Balcones gained international attention for its Texas whiskies, it began as a passion project between homebrewing enthusiasts. In 2008, Himstedt and fellow Waco native Chip Tate embarked on setting up the original distillery, with production starting in 2009. By the following year, Balcones was beginning to garner praise for its Baby Blue corn whiskey as well as Rumble, a honey, sugar, and fig-based spirit. But it was Balcones “1” Texas Single Malt that put the distillery on the map.
In 2012, the single malt won the Best in Glass blind tasting competition in the UK, the first U.S. competitor to take home the honor; it beat out a selection of top Scottish and Japanese whiskies. Once the word got out about Balcones’ upset victory, the game changed for the company. “We couldn’t keep the whiskey in stock anymore after that,” says Winston Edwards, distillery ambassador and brand manager at Balcones. “Instantly, people were calling us from around the world, asking where they could get this Texas single malt. Since then, we’ve basically been playing catch-up.”
Such a sudden flood of demand and extremely limited product availability led the company to take on an outside investment group, Oklahoma-based PE Investors, chaired by Greg Allen, in 2013. Management style clashes and disagreements over increasing costs for the new distillery expansion soon festered between Tate and Allen, and by late 2014 Tate had departed Balcones. Himstedt—who had managed production for the company from the outset—took the reins as head distiller. The company’s plans for construction of the new distillery, which was originally purchased in 2011 for use as a barrel maturation site, moved forward.
Although a new chapter began for Balcones, its mission statement remains in practice today. “We make what we like to drink, but we also interpret things in our own way,” explains Edwards. “It’s not so much about reacting to what the market wants as it is trying to make the best product we can.” The expansive new location on 11th Street grants the company seemingly endless possibilities to continue exploring different types of brown spirits while satisfying demand for its once-allocated products.
Housing the company’s offices, three floors of storage space, a retail store, and a tasting room, the $33 million distillery and warehousing space allows Balcones to produce about 90,000 9-liter cases annually, double the amount they were making in 2016. On the production side, the site features two sets of 4-story copper Forsyths stills, a decommissioned mash tun from Speyburn Distillery in Scotland, larger fermentation tanks, and bottling equipment. “We’re confident that this new distillery will help us achieve what our consumers are demanding,” says Bellinger. “We’ve been limited as to what we could sell due to production constraints and availability. Starting in 2019, we should be well on our way to maximizing our sales potential.”
When Balcones started distilling at the original facility, Bellinger says the company was putting away the equivalent of one 60-gallon barrel a day. Since then, production has been doubling each year and it’s currently able to produce about 18 barrels a day. As production has increased, so has the workforce, with about 30 employees working at the new site.
Along with significantly increasing production of Balcones’ core lineup, the distilling team is now able to age more specialty releases, which in the past have been as limited as a few hundred cases exclusively in the Texas market. The company plans to roll out a slew of specialty whiskies to more markets over the next two years, following a period of experimentation that took place when operations commenced at the distillery two years ago.
Commitment To Quality
Balcones’ new distillery marks a significant investment for the company’s future in keeping up with rising consumer demand, but the commitment can be seen in all aspects of the production process. “For us, ingredients come first—it’s the cornerstone of everything we do,” says Edwards. “These are not your run-of-the-mill ingredients that go into every other spirits production.”
As the youngest, most approachable whiskey in Balcones’ core portfolio, Baby Blue corn whiskey ($40 a 750-ml.), is distilled with blue corn sourced from Arizona, which can cost three times more than the yellow or white corn commonly used in distilling. In total, Balcones produces five whiskies using blue corn. That list includes Baby Blue’s limited-release offshoot, True Blue corn whiskey, which has a 50% abv expression ($60) and a cask strength version ($80), both aged in used casks, as well as Texas Blue Corn Bourbon ($80), aged in new barrels. Typically, Balcones releases the Bourbon and True Blue Cask Strength at the end of the year and True Blue 100 Proof in the spring. In 2017, however, the company began upping the production of True Blue 100 Proof, and plans to make it a more regular offering.
An unexpected star in the core portfolio, Rumble is a departure from Balcones’ whiskey range. Distilled from Texas wildflower honey, turbinado sugar, and Mission figs, Rumble ($50 a 750-ml.) is aged entirely in French oak casks for about a year. Rumble first debuted in 2009 and does particularly well with brandy and rum drinkers. Rumble Cask Reserve ($80) is an older, higher-proof version of the core offering that comes out in the winter and tends to be popular with mixologists. Another non-whiskey spirit, Balcones Texas rum, is an annual limited release that’s aged in Balcones whiskey barrels.
While Baby Blue and Rumble were conceived early on in Balcones’ history, it was the single malt that served as inspiration behind the distillery’s founding. “American single malt wasn’t really a category when our Texas single malt came out,” says Himstedt. “We just loved single malt and wanted to make some.” Balcones “1” Texas Single Malt currently makes up about a quarter of the distillery’s production and, in addition to Baby Blue, is the most widely released of the core products. Last year, the distilling team also introduced a specialty rum cask version of the single malt, finished in casks from Balcones’ rum production. Himstedt says that while some distilleries err on the side of subtlety and tradition, Balcones’ approach is to go bold on flavor. As a result, the Texas Single Malt Rum Cask Finish ($90 a 750-ml.) is loaded with blackstrap molasses and oak notes.
In the spirit of innovation and Texas character, Balcones’ smoked Brimstone whiskey ($60 a 750-ml.) is a response to peated Scotch. Made with a blue corn base, the Brimstone distillate is smoked with Texas scrub oak, rather than using smoked grains for the mash, in a proprietary process the company keeps secret. The result can be polarizing. “You either love it or you hate it,” says Edwards. “Fortunately for us, the love-it side is larger.”
This spring, Balcones is preparing to launch a 100% rye whiskey, a first for the company. Two variants will be rolled out—a younger, lower-proof rye whiskey ($40) and a cask strength expression ($90), which will be sold exclusively at the distillery. With more distillery space, Balcones is working on a number of projects, including finishes in Tequila, Port, and Sherry casks. “We never consider ourselves done with something, even products we already make,” says Himstedt, who notes that about 10% of overall production time is dedicated to experimenting with new products. “I don’t think there’s anything that we’re not trying in some way to improve or make more efficiently.”
Expanding Its Reach
In addition to significantly increasing production, Balcones has its sights set on eventual nationwide distribution from its current limited footprint. In January of 2017, the company partnered with Southern Glazer’s Wine & Spirits in a five-year agreement for coverage in all markets where the distributor is present. “It takes a lot of work off our shoulders, having to find a new distributor in every state and manage them differently,” explains Edwards. “We’ve been so concerned with getting the new distillery up and running, and several months later we have all this whiskey to sell.”
Although Balcones previously had a presence in 18 states, albeit sometimes a limited one, the distillery has pulled out of some markets due to supply constraints. Today, the company’s products are distributed in 14 markets, with Texas, New York, Illinois, Florida, and California in the lead. Now backed by the Southern Glazer’s partnership, Balcones expects to begin entering new markets this year in measured steps. Currently available in the UK, Balcones is also considering eventual entry into a few other international markets. But for now, expanding into other U.S. states and growing the home Texas markets are the priority.
With distribution coverage and spirits production poised for expansion, the company says it’s also working to combat the perception among consumers and retailers that Balcones is highly allocated. “After all those years of being in short supply, people aren’t aware that they can get our products again,” says Himstedt. “But we’re making 10 times as much whiskey now.” The team regularly checks on accounts and stocks to make sure supply isn’t running out. In order to spread the word on a consumer level, Balcones is ramping up its marketing initiatives with the recent hiring of a new marketing agency and regular tastings and events. Education is key to introducing new consumers to Balcones’ imaginative lineup and assuring those consumers that it’s available.
Despite the assorted challenges faced by Balcones over the past decade, the future looks bright for the Texas distillery as it secures its foothold in the craft spirits category. With their supply issues largely behind them and with plenty of demand for market expansion, Himstedt and his distilling team can focus on creating whiskies and brown spirits with distinctive flare. “Over the past two years, we’ve been laying the groundwork for making the whiskey we want to sell,” says Edwards. “The next two years will be about laying the groundwork for selling the whiskey we’ve made. There’s really no end in sight.”