What's Caused The Craft Beverage Industry To Boom?

A change in laws and licensing, and much more, has helped the industry grow and the alcohol flow.


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Photo By Gerald Berliner 

The Hudson Valley landscape has been dotted with vineyards, orchards, and grain fields for centuries, all contributing to a rich heritage of production within wine, beer, cider, and distilled spirits industries. Prohibition in the early 1900s put a serious dent in each undertaking, but in recent years, craft beverages of all kinds have seen a remarkable resurgence throughout the region. Now, says Susan Hawvermale, the director of Orange County Tourism, “If New York grows it, we can turn it into alcohol.”

The modern-day boom began 15 years ago, when the musty, 1920s laws were updated and licensing fees were sharply lowered. Legislation that created Farm Brewery licenses, for example, unleashed creative craft beer production. Craft beer tourism alone brings in an estimated $525 million to New York State — and a good portion of that is spent visiting breweries and purchasing beer in the Hudson Valley.

But regulatory reform alone doesn’t account for the growth in craft beverages. Other important assets have made the Valley into a vibrant center for artisanal ingenuity and beverage experimentation. A welcoming, collegial environment, easy access to the New York City market, access to pure water and outstanding locally grown ingredients, and a great quality of life have all combined to make our region a hub for more innovation.

photo from hillrock estate distillery

Larry Gottlieb, president and CEO of the Hudson Valley Economic Development Corporation (HVEDC), is well-placed to see the growth picture for the craft beverages industry in the region. “Overall growth has been astronomical over the past five years,” he says. “New York State in general has seen an incredible increase in craft beverage locations, but it’s been even more amazing in the Hudson Valley.” He feels that the opportunities in the Hudson Valley have attracted experienced businesspeople who decided to start down the entrepreneurial road, bringing skills with them and leading to an unusually high success rate for new ventures.

Photo From Tuthilltown Spirits

More than 100 distilleries can now call New York State home, but Tuthilltown Spirits Distillery, shown here, paved the way. 

Prior to 1920, more than a thousand small distilleries operated across New York State. Many were run by farmers, turning surplus grain or fruit into small batches of whiskey and spirits. But the passage of Prohibition in the US dismantled the enterprise, and even after alcohol became legal again, farm distilling in New York remained saddled with antiquated rules and costly licensing fees. These lingering relics were finally lifted in 2002, when the Farm Distillery Act was passed. It took until 2005 for the first new spirits distillery in the state, Tuthilltown Spirits in Gardiner, to crop up.

What’s in a Name?

Not just any distillery, brewery, and cidery can put the word “farm” on their shingle. There are regulations as far as volume of product. Here’s how it breaks down:

75,000 — The maximum number of gallons of liquor that can be produced annually to be labeled a farm distillery; 75 percent of all ingredients must come from New York State

75,000  — The maximum number of barrels of beer produced to be labeled a farm brewery; through 2018, at least 20 percent of the hops and 20 percent of all other ingredients must be grown in New York State

250,000 — The maximum number of gallons of hard cider produced annually to be labeled a farm cidery; all cider must be made from fruits grown in New York State

Tuthilltown Spirits now distills vodka from apples grown at local orchards and creates the award-winning Hudson Whiskey line using grain harvested less than 10 miles away. When the rules were further modernized and the licensing fees sharply reduced in 2012, others followed suit — fast. Today, more than a dozen distilleries are producing spirits with Hudson Valley terroir. An outstanding example is Hillrock Estate Distillery in Ancram, one of the very few field-to-glass whiskey producers in the world. All the ingredients that go into Hillrock Estate whiskies are grown and processed on the property, an estate dating back to 1806. And the malt house was the first to be built in New York since Prohibition.

Owner Jeff Baker bought the farm property in 1999, hoping he could somehow bring it back into production. He started with rotationally grazed dairy and pastured beef, but when he saw the distilling movement begin, he realized it was what he had been waiting for. “In the 1820s and 1830s, the Hudson Valley grew half the barley in the country,” he explains. “I felt that craft distilling could build on this history and create an authentic regional product.” By 2011 he had an operable distillery and was growing barley, rye, and wheat on the farm’s 350 tillable acres. Hillrock Estate has already released a limited amount of award-winning whiskies — the bulk of which has yet to be bottled and sold, as it’s aging quietly in oak barrels — and plans to double production this year.

As someone who also works in finance, Baker is very aware of the economic impact of craft beverages here. As he points out, “I want to demonstrate that farming can be profitable. I employ seven full-time workers and six to eight part-timers. There’s no question that this sector is really growing and generating a significant amount of economic activity in our region.”

Photo By Gerald Berliner

Other distilling operations are revivals of the industry that once was. Gangster Dutch Schultz built a sizeable distillery operation in underground bunkers at a farm in Pine Plains, which operated to great success until it was raided and shut down in 1932. Dutch moved on to the numbers game and died in 1935; the 400-acre Harvest Homestead Farm went back to being a farm. The crumbling remains of Dutch’s operation were long neglected until 2010, when partners Alex Adams and Ariel Schlein decided to resurrect the property as a craft distillery. Dutch’s Spirits at Homestead Harvest Farm now grows its own grain and distills its products in a massive Dutch-style barn that also houses a farmer’s market.

 

Brewer photo by matt coates

New York State is second in the country when it comes to apple production (outgrown only by Washington), with the Hudson Valley contributing a major amount of the crop. So when the regulations concerning hard cider were changed in 2012, our area was ready for the rapid growth in pressing that followed.

The town of Walden in Ulster County has recently become home to Angry Orchard Cider House, a well-known producer of hard cider throughout the US. Ryan Burk, head cider maker, explains, “We had been looking for an area to set up home base for our cider, and the historic, 60-acre Crist Family orchard was the perfect place for us to do that. The Hudson Valley is a great fit for Angry Orchard due to its rich apple-growing history and the region’s exciting craft cider culture.”

Angry Orchard has about half of the growing national market for hard cider, but Doc’s Draft Hard Cider, made by Warwick Valley Winery and Distillery, has been leading the way for Hudson Valley ciders since 1994. Since then, Doc’s Draft has won numerous awards for its semi-dry, effervescent flavor. In 2001, Warwick Valley opened the first fruit micro-distillery in the region since Prohibition, using their brand-new license to begin making fruit brandies and liqueurs.

Most of the recent increase in hard cider production in the Hudson Valley has been through new farm-to-bottle operations such as Nine Pin Ciderworks in Albany, Bad Seed Cider Company in Highland, Hudson Valley Farmhouse Cider in Staatsburg, and Aaron Burr Cidery in Wurtsboro. At Aaron Burr, cider maker Andy Brennan works to preserve and restore the early American cider tradition by using heritage cider apple varieties. The ciders are true to their 19th-century roots, made with varietals or from apples grown in local Sullivan County orchards. These are made in limited quantities; the best way to be sure to get some is to join the cidery’s community-supported agriculture (CSA) or visit them at area farmers’ markets.

 

Between 2012 and 2016 the number of New York State breweries increased from 95 to more than 300 — almost as many as before Prohibition closed them down — with more scheduled to come into production. Legally, farm breweries must source at least 20 percent of their ingredients from the state, which has given regional grain growers a boost. It’s also led to the re-emergence of hops farming in the state as demand for a regional product has grown. Dutchess Hops in Lagrangeville became the first commercial hops farm in the Hudson Valley in 2013. They’re still small, only about five acres each and totaling only 300 acres across the state. (By contrast, a typical hops farm in the Pacific Northwest, where most American hops are grown, is 500 to 1,000 acres.)

Local hops and local ingredients are what give a craft beer its special flavor and individuality. This terroir-focused approach is exemplified by Plan Bee Farm Brewery, the most indigenous in the region. Since its founding in 2013, owners Evan and Emily Watson have used only New York State ingredients, most of them grown on their farm in Poughkeepsie. Even the labels on the bottles are printed locally.

For Evan, terroir is everything. “The Hudson Valley is such a great catalyst for creativity and combining craft and agriculture,” he explains. “It’s a wonderful community here — we help each other out. There’s a lot of respect for farming.” To capture the flavor of the Valley and obtain yeast and fermenter microbes, he uses honey from five hives on the farm. The bees provide a synthesis of the flora within a three-mile radius and give the beer its distinctive flavor. The malt for Plan Bee beers is prepared in Germantown, using barley grown by Ken Migliorelli. Other raw organic grains come from Ben Dobson at Stone House Farms in Hudson. The spent grain from the brewery is fed to beef cattle at Underhill Farm across the road. And some beers are spontaneously fermented and aged in oak barrels for three years, making the Plan Bee model more like a winery than a brewery. While their beer is now distributed to several places throughout the state, they’re also available from the farm itself, either at their seasonal stand (for non-members) or from a buyers’ club called The Hive, which operates much like a farm CSA.

 

PHOTOS PROVIDED BY BROTHERHOOD WINERy

Though our craft beverage business is widely associated with the 21st-century legislation, the industry here officially dates back to 1832, when Livingston County resident Samuel Warren produced a vintage and established the short-lived York Wines. Better known, Brotherhood Winery in Washingtonville produced its first commercial vintage in 1839. Other vineyards and wineries followed throughout the region, but, as with other forms of craft beverages, were largely shut down during Prohibition. Brotherhood managed to survive this dark period by producing sacramental wine. After Repeal, Brotherhood came back into full production and today is the oldest continuously operating winery in America. It’s a popular tourist destination, offering tastings and tours of its massive underground wine cellars.

Rivaling Brotherhood for historic importance is Benmarl Winery in Marlboro. It’s the oldest vineyard in America, holds New York Farm Winery license number 1, and is currently producing small-batch wines from a 37-acre estate overlooking the Hudson.

Benmarl and Brotherhood are the touchstones for 43 more vineyards and wineries that have grown up in the Hudson Valley over nearly two centuries. More recently, the wine industry has benefited from the same regulatory relaxation that has helped other beverage-makers in the region. New ventures have joined long-time stalwarts, such as Millbrook Vineyards and Winery in Millbrook, which had its first vintage in 1985. Hudson-Chatham Winery in Ghent became Columbia County’s first winery in 2006, while Robibero Family Vineyards became one of the newest winemakers in the region in 2010.

 

Susan Hawvermale of Orange County Tourism feels that craft beverages in the Valley still have plenty of room for growth. “Events on the Shawangunk Wine Trail sell out regularly. Other local craft beverages are a big and growing draw for both tourists and residents,” she points out. Jeff Baker of Hillrock Estates agrees, adding that, “Across the country, there are now 2,000 craft distillers, up from only around 200 just 10 years ago. I think the trend will peak at double what we have now.”

This boom brings benefits beyond tourism dollars and employment: it preserves productive farmland. Apple orchards that might be bulldozed for subdivisions are now more valuable if they stay active. Because cider apples don’t need to be perfect, growers don’t need to spray chemicals on them as much. Heirloom apple varieties are being resurrected to provide new flavors for cider, while vineyards are being restored and new ones are being planted, and the demand for hops and organic grain is leading to greater production and experimentation with new varieties. Best of all, craft beverages are helping to preserve the agricultural heritage, open space, and scenic beauty of the Hudson Valley.

   

Craft Beverages by the Numbers 

3 wine trails for touring the Hudson River viniculture area

35 cideries in New York

56 wineries and tasting rooms in the Hudson River viniculture area

60 acres of apple orchards in production at Angry Orchard

 130 farm breweries operating in New York State today

 235 acres of vineyards producing 585 tons of New York grapes each year 

278 beer breweries (and counting) in New York State today

1,089,536 barrels of beer produced by New York State craft brewers in 2016

 $3.5 billion total economic impact of craft brewing in New York State in 2015