You can take all the worry and hand wringing about the future of local distilleries in Washington State and pour it out. Capitol Hill’s Oola is on a mission. And it begins next week.
“Starting March 1st, I will be out on the street taking orders and dropping products off,” Oola manager Brandon Gillespie tells CHS about the neighborhood spirit producer’s plans for what he calls the “first big date for 1183″ — the first day the state’s distilleries can sell their goods directly to bars and restaurants and the beginning of Gillespie’s crash course education in liquor distribution as he gears up to get Oola on the shelves of some of the next generation of Washington liquor retailers.
The plan cooked up by Gillespie and Oola owner Kirby Kallas-Lewis is to dive headlong into self-distribution, connect with local businesses and gain a foothold quickly as the state’s liquor economy undergoes radical shifts with the implementation of I-1183.
“It’s not going to be an easy task by any means,” Gillespie said. “We have to implement systems for our own operations to make this work. Many are signing with distributors.”
“One of the things we’re concerned about is that our prices will go too high if we’re not in control,” Gillespie said.
The plan for another distillery on Capitol Hill is less certain. Sun Liquor is a bit of a freak — a bar with a distillery throws Olympia for a loop.
“We’re still in the midst of figuring out what it all means for us as the sole bar/distillery in the state,” Sun Liquor’s Andrea Chapman said.
“We’re an anomaly and therefore the laws aren’t as clear with us and in a lot of ways they don’t know what to do with us!”
According to Erik Chapman, bar manager and head distiller, as of March 1st Sun will still be unable to sell over to counter for personal use but, like Oola, the E Pike distillery will be eligible to distribute to bars and restaurants with a Class H license. ”We will be able to sell to clients for personal use in June,” Andrea said. “We will be doing everything that we can to maintain the same price point we are currently at regardless of the additional taxes associated with 1183.”
The uncertainty for everybody already has the distillers looking back at the good old days. Many of the state’s small distilleries went through a brief but fruitful summer and fall. Oola started selling its products direct to consumers at its 14th and Union location in October. Gillespie said the Oola tasting room was a big hit and the pre-1183 sales structure made for a mostly profitable venture.
“That was a very large part of our business plan,” Gillespie says of the brief period before the approval of the initiative helped usher in additional distributor tax on each bottle sold. “Sales out of our tasting room were just great. The new tax structure makes it so sales out of the tasting room aren’t nearly as profitable.”
“Distribution is now going to become the focus,” Gillespie said.
Gillespie says the new mission starting March 1st is to connect with local restaurants and bars while starting to build a distribution channel for some of the larger players. It’s a big deal for Oola. The company is retooling its approach, forgoing a middleman and launching out into the strange new universe of the Pacific Northwest liquor business. It’s an effort to control their own destiny as much as possible. And it’s a longterm plan.
Gillespie says Oola will continue self-distribution through at least March 31, 2013. On that date, 1183 calls for distributor fees to be sliced in half — from 10% to 5% — which could, Gillespie hopes, create a more realistic opportunity for a third party distributor to offer Oola spirits at a price that works in the marketplace. But even the line of site to that 2013 target gets murky — big distributors are on the hook for $150 million in fees to the state by that time, guaranteed. Depending on how things play out in 2012, booze prices in 2013 could go even higher if distributors decide to charge more to help make up the gap.
In the meantime, there’s next Thursday when the new focus for Oola begins. If you’re a bar or restaurant on the Hill with a class H license, drop Oola a line. The rest of might want to make plans to find a seat at a favorite bar and order a Capitol Hill-born cocktail to celebrate March 1st.