‘Craft’ Whiskey Is Probably From a Factory Distillery in Indiana

So, the modern beverage industry is largely an industry based on curation, blends, and added value. And that's fine. I'm not so sure why people care so much, but it must be because people have this romantic view that their beverages should live up to some farm-to-table ideal.

Kona Brewing has the vast majority of their beer brewed in facilities on the mainland. Many people buy the beer thinking it's a brewed in Hawaii beer, but realistically it's just brewed on the mainland according to Kona's specs.

With consolidation in the craft beer industry I'd only expect more of this sort of truthiness in the future.

My company[1] builds quality control tools for artisan beverage producers; we know that craft production is a batch process relying on agricultural grains with inherent variation.

That doesn't mean it shouldn't be produced.

Craft production is undoubtedly higher quality than any continuous production - it just takes more skill (or software tools..) to do correctly and consistently.

Furthermore, the use of certain ingredients to reduce noticeable inconsistencies came at a time before process control was a known science. For example, hops were originally added to beer being shipped from England to India (hence the name India Pale Ale or IPA). Now, that practice didn't survive because of quality control - it has survived because people like the taste of IPAs and there is demand in the market for that flavor profile.

Consumers don't think of skill of production when rating beers or whiskeys; they judge only the resulting flavor profile and are influenced by contextual clues such as age statements or 'hand made batch numbered artisan spirit' promises.

Agreed, IPA is a no-brainer beer without subtlety. If you put enough hops in sewer water it'll taste like an IPA but that doesn't mean making a pilsner is rocket surgery.

And as long as I am ranting on IPA, I can't wait for the current craze for them to be over. A few years ago when I would ask the waitress what beers they have on tap she'd rattle off 8 wheat beers. (Seriously, one wheat beer in the summer is plenty and Bell's Oberon is a pleasantly inconsistent choice.) Now it's half a dozen IPAs. I have a suggestion to the bars and brewers for the next beer fad: an old world artisinal classic - lager.

And the off-flavors aren't a by-product of the size of the producer. I work in the industry doing quality control at the same company[1] as another commenter, and we see inconsistencies with producers the size of a local brewpub to large producers that sell to 7+ states.

Using technology can help reduce inconsistencies, but the end goal it to never let the consumer taste a bad batch. It is cheaper to dump a bad batch than to ship it, as this may result in loss of customers.

Bigger producers know this and will more readily dump a bad batch than a smaller producer.

Lastly, I have seen a producer that ships to 3 states have a manual brewing system, while a small neighborhood brewpub that just started distributing uses a fully automated system.

[1] www.gastrograph.com

Bitter and woody notes are important balances in higher quality bourbons, but are often perceived as negatives when doing comparative evaluation.

This is likely from your description, as the higher end bourbons tend to be wheated and lighter, but with a more prominent woody body from their longer barrel ageing.

During the gold rush, sell picks and shovels. Lots of tech companies have the same model. With that model, MGP have production personnel and a few account managers. They don't have to pay for any marketing themselves, while they benefit from the full range of creative output of the American liquor industry. Some people want to buy whiskey that was made in New Mexico by hipsters like "Simeon Turley" and "Thomas Tate Tobin", while others want to buy whiskey made in Iowa by "small townsfolk".

By all accounts, MGP is doing just fine and dandy being a B2B seller, and supplying the current craft-distillery boom. They can do that with very little supply-chain risk and expense.

Their current position only becomes challenging if one or both of the following happen: 1) More industrial, B2B distillers enter the market, or more big-batch distillers devote resources to supplying the craft market; 2) the craft market goes bust, forcing a major demand shock onto MGP's supply. If #2 materializes, then MGP can sit on the excess inventory, and eventually bottle it as premium liquor.

(Fortunate?) Mismanagement. They wanted to make their own brand but contracted out all their old stock so the only thing they could sell now is very young ones unless one of the existing customers jumps ship.

I wonder whether their existing contracts prohibit that.

There is some labor & R&D here that can't strictly be - ahem - distilled to dollars and cents.

It's the bottled water business model, but swankier.

Even Hangar One, a favorite of mine, is at least half neutral grain spirit from industrial farms. Thankfully they re-distill it with pot-distilled grape vodka, which rounds it out (no rubbing alcohol flavor).

The important part of vodka is what water they are adding to that ethanol. It's not "just water" in that case, though it may very well be tap water (which is fine if they have good tap water).