Florida Trend | Florida's Business Authority

The spirited growth of Florida distilleries

Philip McDaniel and Mike Diaz have a few things to boast about in their young business. They invested $3 million to renovate the oldest commercial ice plant in Florida and launch the St. Augustine Distillery there. It’s now a stop on the historic city’s trolley tour routes, which brings in tourists. Their product shows promise. The distillery’s Pot Distilled Rum won a gold medal at the 2016 San Francisco World Spirits Competition. This year, they debut Florida’s first largeformat bourbon.

Most important for the success of their enterprise, the state eased its regulation of craft distilleries in 2013 and 2015, boosting sales and profits and leading to a leap in the tiny industry in the state.

As of this year, there are 41 licensed distillers in Florida, up from just nine five years ago, according to the state Division of Alcoholic Beverages and Tobacco. The number of gallons sold last year — 19,174 — was almost nine times the 2009 figure.

It’s a heartening trend for the distilleries, although Florida’s output is just a drop in the shot glass compared to the overall industry. The Jack Daniel’s distillery in Tennessee, for example, produces 106,000 gallons a day.

Florida distillers say tourists, locals and, they hope, an increasing number of people in other states will be drawn to artisanal liquor made from Florida-grown sweet corn, sugar cane, oranges and other ag products. “I really want Florida to be recognized as a state where great spirits can be produced,” McDaniel says.

McDaniel, 58, came out of retirement from a marketing career to launch his distillery. He wanted it to be known for bourbon. The difficulty is waiting for the bourbon to age. Like a lot of young distilleries, therefore, St. Augustine started with quick-to-market spirits such as rum, gin and vodka, with bourbon coming this year.

As the bourbon aged, Mc- Daniel joined with others in his craft to break down Florida’s antique alcoholic-beverage control laws. Like many states, Florida after Prohibition required that spirits be sold through a three-tier distribution system of manufacturer to distributor to retailer.

McDaniel says he and other distillers have to sell three to four bottles through a distributor to equal the profit on one bottle sold direct to a consumer. The young Florida industry battled to be able to sell directly to the walk-in trade, arguing it was good for job creation, the ag industry and tourism.

In 2013, the state Legislature allowed Florida-based distillers that sell no more than 75,000 gallons to sell up to two bottles per year to a walk-in customer. In 2015, it expanded that to two bottles per brand per year. An effort in the Legislature this year to lift the cap entirely failed.

The changes achieved by the Florida Distillers Guild certainly helped the industry and especially distillers like McDaniel, whose operations see tourist traffic. St. Augustine Distillery accounted for 47% of distiller gallons sold in the most recent period tracked by the state. Sarasota-based Drum Circle Distilling, which also offers tours, held a 14% share. Chef Distilled in Key West and Cape Coral-based Cape Spirits Wicked Dolphin Rum, both of which have tours, each held 6.5%.

Distillers without a touristamenable location want one. Black Coral Rum co-founder Ben Etheridge, 34, and his father, Clint, 67, started their distillery in 2013 and came out with their first rum in early 2015. Ben Etheridge says he’s been making moonshine since he was a youth. They make their rum entirely from black-strap molasses, purchased from U.S. Sugar, to make “an authentic Old World spirit,” both white rum and spiced rum. No sugar is added in the process.

Their distillery is coming out with new offerings, including a three-year aged rum. Its products are distributed throughout Florida and lately Georgia, and it’s moving into other states. But the distillery’s location in a crimeimpacted area in Riviera Beach in Palm Beach County makes tours and the face-to-face sales that come with them impossible. He’s considering a move.

Etheridge and McDaniel say they get contacted frequently by people who want to start a distillery in Florida. Says Etheridge, “I get calls every week, ‘Hey, I’m starting a distillery. Can you tell me how to … ?’ If you don’t know, you’re throwing your money down the drain,” he says.