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Interview: House Spirits CEO Thomas Mooney

April 7, 2017

Portland, Oregon-based House Spirits is one of the largest craft distillers on the West Coast, operating a 250,000-case capacity distillery that opened in 2015. The company produced about 50,000 cases last year. In November, House sold its biggest brand—Aviation Gin—to New York’s Davos Brands. Looking ahead, the company plans to focus on expanding its Westward Oregon Straight Malt Whiskey, while entering new categories such as rum. SND senior editor Christina Jelski recently spoke with co-owner and CEO Thomas Mooney to discuss innovation plans and the rapidly changing craft spirits landscape. 

SND: The craft spirits market has become very crowded. Do you see a shakeout coming?

Mooney: I don’t think we’re anywhere near a saturation point with the consumer. Craft spirits (as defined by the American Craft Spirits Association) represent only 2% of total spirits volume and 4% of total dollars. But the route to market is very challenging. If anything, the consumer probably has the perception that there are fewer craft spirits choices than there really are. That relates to a growing issue within the industry—direct access to the consumer. If you look at a winery with a half-million dollars in annual revenue, most likely they’re doing much of that out of a tasting room and wine club. They’re not going through a major wholesaler and distributing in 26 states. So we’ll see greater interest in the ways in which spirits producers—especially the smaller ones—can similarly participate in a direct-to-consumer business.

SND: Major suppliers are increasingly interested in craft spirits. How do you see that dynamic playing out?

Mooney: We’re only at the tip of the iceberg. Spirits have always been a scale-sensitive business, where it’s challenging to be small. Wholesale consolidation over the last few years has only made it even more challenging. What’s driving growth in spirits is an aggregate of relatively small brands, almost all them local or regional. The next wave of acquisitions may not involve larger suppliers identifying which individual brands can break out and be huge. Instead, they might try to build a portfolio of regional brands that, in aggregate, represent a larger acquisition. Maybe they won’t try to find one or two brands that can immediately become national, but rather acquire 10 different brands that collectively have a national footprint and a strong local following. I think we’ll see deals like that take shape.

SND: With Aviation now out of the portfolio, what is House Spirits’ largest brand?

Mooney: Krogstad Aquavit is our largest brand today. But that will only be true until we have more whiskey to release. By this time next year, Westward whiskey will have taken that spot. Currently, most of the Westward single malt whiskey we sell is either out of our tasting room or in Oregon, California or New York. But based on the supply curve looking forward, Westward will be about a 25,000-case brand by 2019.

SND: What other projects are you working on?

Mooney: We’re innovating behind Westward, which has been a single-SKU brand. In the next six months, it will have three different expressions: the existing single barrel; a second whiskey that will be a mix of a handful of barrels; and a beer cask-finished expression. The single barrel will continue to retail at around $50 a 375-ml., while the blend will move into a 750-ml. bottle and retail at around $80. The beer cask-finished whiskey hasn’t been decided, but it will likely be line priced with the blend. In terms of new brands, we’re really excited about Casa Magdalena rum (about $20 a 750-ml.), which is distilled in Guatemala and will launch in the next few months.

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