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Portland craft distillers grow up, evolve

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Articles - August 2010
Wednesday, July 21, 2010
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Portland craft distillers grow up, evolve
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Tom Burkleaux (left) and Matthew VanWinkle funded the startup of New Deal Distillery themselves. The business partners continue to work day jobs as they grow the business. They produce spirits for outside clients, a common strategy in an industry with high overhead costs and a required federal license for a distilling space.

Like Martin, Tom Burkleaux and Matthew VanWinkle, the owners of New Deal Distillery in Southeast Portland, lead double lives. For the past six years, they’ve spent weekdays in an office, where they crunch code as programmers at the same company. At night and on weekends, they become craft distillers — monitoring stills, ordering glass bottles, coordinating label designs and keeping an eye on cash flow.

In 2004, New Deal opened in a 120-square-foot room in ActivSpace in Southeast Portland with $3,000 of starting seed from Burkleaux’s and VanWinkle’s personal credit cards. Two years ago they maxed out the rest of their credit cards to move across the street, into the distillery’s current 5,000-square-foot space, where they produce a line of vodkas.

“Now New Deal is supporting itself, and I’m repairing my balance sheet,” says Burkleaux. “I’m glad we got to this point. If we didn’t believe in this industry, it would have been easy to get discouraged.”

With the additional space, New Deal was able to begin producing spirits for outside clients, including Loft Liquors and J. Witty Spirits, both based in the Bay Area. These types of subleasing partnerships are common in the industry, which has high overhead costs and a required federal license for a distillery’s physical space.

Burkleaux says he’s finally reached a point where he can seriously consider phasing out his day job, especially as New Deal works toward developing brandy, gin, whiskey and moonshine. Still, he warns prospective distillers about the financial realities of the industry.

“I don’t think it’s the route to fabulous wealth and riches, but hopefully you can find a sustainable living, express some creativity and be part of the community,” he says.

Unfortunately for Highball Distillery, another dot on the Distillery Row brochures that no longer exists, circumstances took a less fortuitous turn. In March of this year, Highball lost its lease, which spooked one of the two founding business partners, who backed out of the project entirely.

Highball founder and current owner Michael Heavener is trying to figure out how to re-establish the business before his existing stock of organic vodka runs dry. In the meantime, his homemade distilling equipment is collecting dust in storage at Integrity Spirits.

The equipment itself poses a problem; when assembled, Highball’s stills are too big to fit in any existing Distillery Row space. That’s because Highball took the purist approach to distilling by starting with whole, organic wheat and boiling it into a mash, instead of starting with a purchased neutral grain spirit, the common practice for most craft distillers.

The extra step meant extra costs, so Highball was forced to sell one bottle of vodka for $35, a high price point during a recession. “Our vodka was the same price as Grey Goose, but it was a local and organic product,” Heavener says. “But the marketing blitz of Grey Goose was tough to contend with.”



 

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