​​​​​​​Crafting an Industry: Edmonton’s Fledgling Distilling Scene Ramps Up

By Michelle Ferguson March 2, 2018

Meet Grace and Marie. One is steadfast and hardworking. The other is experimental and volatile. Both are stills at the newly opened Strathcona Spirits Distillery.

Strathcona Spirits founder Adam Smith - Chris Onciul/EEDC

In keeping with distillers’ tradition, founder Adam Smith named them after his grandmothers. The small dedicated gin still embodies Marie, a free-spirit who left her family to read tea leaves in Las Vegas, while the large copper-bottomed mash tun, stripping and spirit still is farm-wife Grace.

“Grace, as a still, is a hard-working, steady Eddie, pays the bills kind of operator. She does a lot of the repetitive and heavy lifting,” explains Smith during a tour of his facility. “My grandma Grace held down the farm. She kept it on track and was what really kept the family together.”

But Grace almost didn’t make it through the doors.

When Smith set out to open a distillery in 2013 the market was red hot. While Alberta had only recently allowed craft producers to enter the market, the distilling revival was already well underway in other parts of North America. Manufacturers couldn’t keep up with demand. Wait lists were approaching a year and half, and used equipment was selling for more than new.

Luckily, Smith found an opening with a well-regarded still maker in Missouri. He placed an order for a custom-built combination still that would maximize production within his 740 square-foot-building.

But when he went to pick Grace up, she was 1,500 pounds heavier and 16 inches taller than expected. A piece of ceiling had to be carved out to accommodate her.

A master in cutting through red tape (as well as plaster), Smith is among a wave of pioneers shaping Edmonton’s fledgling distilling industry.

“We needed a very specific build. Being the smallest distillery in North America, we needed a very versatile unit that would allow us to get the best use of the tiny space that we have.”

Adam Smith

Shayna Hansen and her husband Kris Sustrik of Hansen Distillery - Ryan Jackson for EEDC

Seventeen craft spirit producers have opened their doors since the Alberta Gaming and Liquor Commission removed the minimum production requirement that mandated at least 250,000 litres of spirits a year. Four of them are in the Edmonton region – Hansen Distillery, in northwest Edmonton; Rig Hand Craft Distillery, in Nisku; Elk Island Spirits Co., in Strathcona County; and Strathcona Distillery, the latest to open its doors to the public in Old Strathcona.

Until recently, distilleries and breweries were limited to industrial parts of the city. While there are some exceptions to this rule – Situation Brewing is prominently located in the heart of Old Strathcona and Oilers fans can enjoy Yellowhead pre- or post-game – these are a result of much finagling on the part of city planners. As the interest in microbrewing and craft distilling grew, it became increasingly difficult to find appropriate locations for these facilities.

It’s for this reason Hansen Distillery is tucked away in a northwest industrial park. It’s also why Strathcona Spirits had to wait an entire year before it could offer tours to the public.

Though the two distilleries opened within days of each other, the latter was located within 500 metres of an existing liquor store and therefore was unable to sell product on site.

Smith took his case to city planners and in September 2017, city council voted to remove the restrictions, making it easier for breweries and distilleries to set up in commercial areas.

For Geoff Stewart, founder of Rig Hand Craft Distillery, the biggest hurdle was financing. As craft distilling was an unproven industry in Alberta, the banks were hesitant to loan him money, so he and his wife cashed all their RSPs, took out a second mortgage and sold a few rental properties.

“Basically rolling the dice with our life savings,” he says.

Education was also hard to come by. At the time, there were no distilling programs offered in Alberta. (Olds College now offers an eight-week craft distilling course.) Recognizing that this was a problem, Stewart hired an instructor and began offering courses at his facility.

“This industry is going to explode,” explains Stewart. “We can either look at that as a threat to our business, or we can be more creative… If there’s going to be a gold rush, why don’t we be the guys selling the shovels and teaching guys how to shovel?”

Stewart believes there is room for 70 to 80 distillers in Alberta. He doesn’t see growth within the craft industry as a threat, but rather as an opportunity to steal market share from a common competitor: the global brands that currently dominate store shelves.

In December, the province reduced the markup on self-distributed products from $13.76 per litre to $2.46 per litre. The move puts craft distillers at parity with Alberta’s microbrewers, but does not affect spirits sold in liquor stores.

Though not exactly what was promised during the 2017 provincial budget speech, Shayna Hansen, co-owner of Hansen Distillery, says it’s a step in the right direction. The move allows her to keep prices competitive with big-name brands, and, most importantly, keep the doors open.

"The promise of the lower taxes was definitely a deciding factor on us moving forward with our start up," says Hansen. "Having any tax break for a small business is greatly appreciated, but with the way this one was set up it doesn’t help us as much as we had hoped for. We are small (with only three of us as full-time employees) so to have to self-distribute is a lot more difficult for us to do."

Some of the offerings at Rig Hand - Jeff McDonald/EEDC

In November, the Alberta Craft Distillers Association sent a letter to provincial government urging it to push forward with the tax break. The association warned that without any assistance many distilleries were at risk of shutting down.

Hansen worried she would be counted among them. Margins were so low the distillery was barely making a profit, yet consumers were demanding lower prices.

It comes down to a lack of understanding, says Stewart: “We can't even begin to try and compete with Smirnoff on a volume basis. They buy their grain by the train car load full; their plants are completely automated. They can produce liquor for pennies on the bottle, and here we are, we do everything by hand.”

As the industry grows, he hopes customers will come to understand and appreciate the advantages of craft spirits.

Located in a traditional grain belt, Edmonton distillers have access to some of the best raw materials. Not only is Alberta barley exported to beer and scotch makers around the world, but northern hemisphere wheat is ideal for distilling vodka and gin due to its higher starch content.

But it’s not just about quality, it’s also about community.

The industry directly employs over 100 Albertans, invests millions in capital assets, and supports local farmers.

Smith receives all his grain from a farm 23 kilometres down the road, while Rig Hand sources lemons, plums and potatoes from Spruce Grove.

And if that isn’t reason enough to support craft, says Smith, Alberta’s small producers compete at a global level – with all four Edmonton distilleries picking up awards at the 2017 Alberta Beverage Awards.

Rig Hand Craft Distillery, Hansen Distillery and Strathcona Spirits Distillery are all proud Edmonton Made businesses. Are you Edmonton Made? You can register for the program here. Have a story idea for an Edmonton Made company? Contact us at made@edmonton.com.

Also, keep an eye out as two new distilleries prepare to open their doors in the Edmonton region: Black Diamond Distillery, in St. Albert, and Lone Pine Distilling, in Edmonton.

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