The Star Beacon; Ashtabula, Ohio

April 6, 2013

Red Eagle Distillery's bourbon, rye whiskey go on sale today in Harpersfield Township

Star Beacon

HARPERSFIELD TOWNSHIP — Shortly after noon today, some person will make local history by purchasing the first bottle of liquor to be legally distilled in Ashtabula County in decades.

Sporting the Red Eagle label, the 375-milliliter bottle of dark-brown bourbon will sell for $23. Aged since last summer in seven-gallon barrels, the bourbon will be joined by a rye whiskey to create the product line of Red Eagle Spirits, which is owned by Gene and Heather Sigel of South River Vineyard.

Located west of the vineyard’s tasting room on South River Road, the distillery is one of a dozen or so that

sprung up in the state after the Ohio Legislature passed H.B. 243, which changed Ohio’s regulations on distillery operations. Designed to promote distilleries as a tourism destination, the law opened the door for boutique distillers to operate in counties that previously did not meet the population threshold. Former 99th District Rep. Casey Kozlowski, R-Saybrook Township, worked with Ron Young, R-Leroy Township, to draft the legislation.

The Sigels began work on their distillery months before the bill became law. They purchased a farm and converted the 1885 barn into the distillery/bar, purchased a 250-gallon copper still from Kentucky and began producing spirits as soon as the federal permit was issued last year.

The bar held a soft opening in September, offering cocktails made from liquors produced by other distilleries and purchased through the state liquor agency. Last month, Sigel learned that Red Eagle’s product was approved for sale at the distillery and he set today as the first date of sale.

State law requires him to sell his liquor to the state, then buy it back for resale. It is a paper transaction that requires a considerable outlay of upfront cash by Sigel, who sells at wholesale but buys it at retail.

Ohio law does not allow Sigel to serve his own liquor at the bar, except in 1/4-ounce samples, a maximum of four samples per customer per day. All sales of his own liquor are carryout.

Sigel can’t even sell cocktails made from his own product because he would first have to purchase it from the state agency. But the agency has to sell 750-ml bottles to bars, and Sigel’s bourbon is bottled only in 375-ml quantities at this time.

“So many people are new to distilling, we didn’t want them to be required to buy a large bottle to start out with,” Sigel said.

The pricing was set after meeting with Division of Liquor Control staff. Ohio grabs $11 of the $23 retail price; the state’s share goes to Jobs Ohio, which is supposed to create jobs. But Sigel said that in the case of small distilleries like his, having the state grab so much of his profit actually works against job creation and further investment.

“It’s a very perverse way to have it structured,” said Sigel, who has written to Governor John Kasich about the issue and is working with Young to change the law. He said if the state were to allow him to keep more of the selling price, he could hire more employees and expand his distillery business just as he has expanded his winery.

At the current rate, Sigel earns about $1 per bottle, labor costs excluded. He’s invested $600,000 in the operation thus far and will spend another $100,000 this summer on a septic system and restrooms for bar patrons.

“If they change the law, I’ll see a profit in a year or two. Otherwise, I’m looking at five years. It’s up to the State of Ohio to see the benefits of changing it,” he said.

Sigel, who jumped aboard the wine wave just as it was beginning to swell, appears to have picked another winner by focusing on craft bourbons and rye whiskey. The products fell out of favor with consumers in the 1970s and 80s as baby boomers associated them with the cocktail-drinking habits of their parents. But retro is hot, and with bourbon being a uniquely American beverage, demand for the liquor has swollen, as have prices. Prices of $50 to $125 per bottle are common.

“It’s definitely a nostalgic phenomenon,” says Kevin Orris, who is training to be a distiller under Sigel and did his college thesis on the history of Jim Beam brand. “Everyone likes the old stuff and (bourbon) is designated by the Congress as the native spirit. ... Bourbon is a symbol of America.”

Sigel said it was “pure luck” that he and Heather picked bourbon as the route to take their distillery. They also have some Concord sherry in the barrels, but it must age at least two years; otherwise, it would have to be labeled “immature.”

He was able to expedite the bourbon to market by using small barrels, which expose the aging liquor to a larger surface of charred oak, a requirement of the bourbon-production process. Sigel said he’s been making about 55 gallons of finished whiskey every week since late November; most of it is in larger barrels that will take longer to age. He’s suspended production for at least two months while he turns his attention to the vineyard side of the operation.

Sigel hopes to build another tourism attraction around the distillery, which is much more visually fascinating than a winery’s back-room operations. He also wants to support local agriculture with the product line. He’s already converted 20 tons of non-genetically modified corn grown in Orwell Township into bourbon and whiskey. Some of the rye he used was grown on his own farm.

Red Eagle Distillery is located at 6202 S. River Road; hours today are noon to 10 p.m.

Online: redeaglespirits. com