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VDA’s goal is for Virginia’s distillery


industry to become as big as the Old Dominion’s wine industry, Moore says. According to the Virginia Wine Board, the commonwealth’s 264 wineries cur- rently rank fifth nationally among states with most wineries. When compared with other states, the number of Virginia distilleries ranks fifth on the East Coast and 14th


in the nation. The VDA isn’t advocating privatizing


the sales of Virginia spirits, but distilleries want more parity with the wine and beer industries, says Curtis Coleburn, govern- ment relations director for the VDA and the former chief operating officer at the Virginia ABC.


Gaining equal footing Coleburn


would require changes at the state level, Coleburn says. VDA worked on legislation passed during the 2017 Virginia General Assembly session, which now allows distilleries to


sell bottles at festivals and events. The association plans to tackle more issues during the upcoming session.


Battles ahead VDA says distilleries have to pay


more than wineries and breweries to pour drinks in their tasting rooms. Distillery tasting rooms function as ABC stores. A distiller has to sell its bottles to ABC, then buy them back at full retail price before pouring samples. Wineries and breweries, on the other hand, don’t have to go through a distributor when selling their products on-site. VDA would like to remove the markup for samples sold in distillery tasting rooms. Virginia pays an 8 percent com-


mission to distilleries based on sales for operating ABC stores on-site. The commission used to range from 7 to 15 percent based on distilleries’ store sales — the lower the sales, the higher the commission. The commission was elimi- nated in 2016 for three months because of budget cuts and later reinstated at a flat rate of 8 percent. “That really hurts us because every-


body went out and hired … employees and has a certain amount of overhead to run our operations,” says Scott Harris, co-founder and general manager of Cato-


Photos courtesy Virginia Distillers Association www.VirginiaBusiness.com


Gareth Moore is president of the recently formed Virginia Distillers Association. He is CEO of


Lovingston-based Virginia Distillery Co.


to the number allowed at wineries and breweries — while also permitting distilleries to serve samples at events. Distilleries also seek to change their Sunday business hours, opening at 10 a.m. instead of noon to compete with breweries and wineries. In addition, many distilleries want


to serve more alcohol in their tasting rooms, but that’s not an issue VDA plans to address next year. Currently, spirits producers can serve only three ounces of alcohol to each customer. The permitted amount increased from two to three ounces last year, thanks to a change in state law, but the limit is still difficult to explain to customers who aren’t used to such a rule. “It sometimes ends with consumers


ctin Creek Distilling Co. in Purcellville, which makes whiskey, gin and brandy. VDA seeks a commission of at least


25 percent of a distillery store’s retail sales, a change that would need approval from the General Assembly. The association also wants to change


a law prohibiting distilleries from mak- ing mixers in their tasting rooms with alcohol they don’t produce. “If I make a gin, and I want to [make] a martini, I can’t do that because I didn’t produce the vermouth that goes in it,” Coleburn says. The association also would like


Virginia ABC to increase the number of event licenses allowed for each distillery from four to eight per year — similar


Amy Ciarametaro says the success of Virginia Spirits Month in September shows what the Virginia Distillers Association can achieve.


having a sour feeling about their experi- ence,” says Moore, the VDA president. “Whether they blame it on the state government or whether they blame it on us, it’s still a negative thing.”


Working with regulators While Virginia distillers face chal-


lenges because of state control, the arrangement also has its advantages. “From a sales and marketing stand-


point, it’s a heck of a lot easier to go in the non-controlled states, it’s just like selling any other product,” says Gary McDowell, partner and manager at Richmond-based Cirrus vodka. “From a distribution standpoint, it’s easier [in Virginia] because we … send [our prod- uct] to the [ABC] warehouse, and they take care of getting it to the stores, and all the restaurants have to buy from the store.” (Restaurants also now are allowed to buy products directly from distillery stores.) Space is limited in ABC’s warehouse


and on its store shelves. Virginia distill- eries face a lower sales threshold to gain spots on ABC shelves. The threshold varies per product, but typically is about half of the sales required for national spirits producers. Distilleries also must meet certain criteria to earn space on store shelves, including customers’ special order requests and sales in other states and tasting rooms. Producers also must have brands that customers recognize. According to ABC, only about 25 percent of Virginia products meet the


VIRGINIA BUSINESS 33


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