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Heartland Distillers joins mini-boom in artisan spirit-making

June 1, 2009

From the outside, Suite 1000 of the Uptown Office Complex looks like any of the strip-center businesses clustered between Castleton and Fishers. But behind the glass door, copper and steel teem with life as Hoosier sweet corn is heated, mixed and filtered on its way from the silo to the saloon.

The small space, with unfinished concrete walls and exposed air ducts, serves as the tasting, bottling, labeling and packaging station for Heartland Distillers' only product—Indiana Vodka.

Heartland founder Stuart Hobson lovingly heats a corn-water mash in a copper-pot still, beginning the process of converting the home-grown grain into 80-proof vodka. Since January, Heartland has turned out several small batches of its signature spirit, available at about 300 area retailers.

Originally, vodka makers used potatoes for their mash, but now most prefer wheat. Indiana Vodka is produced exclusively from local corn.

"You can make vodka out of pretty much anything you can ferment, but I wanted to use a local product," said Hobson, 42. "All vodkas are mild in flavor, but ours has a sweet finish ... from the corn."

Hobson came across a craft distillery on a trip through northern Michigan two years ago, inspiring him to sell his 15-year-old Fishers Liquors chain to a competitor. He used a portion of his proceeds to order specialized equipment from Germany, and in January launched his own microdistillery. While Hobson would not reveal his exact startup costs, he said they reached six figures.

Heartland Distillers already holds contracts with about 300 retailers, including Kahn's Fine Wines and Spirits. Kahn's owner Jim Arnold said demand for premium vodka in general has helped the local product, which has a suggested retail price of $25.99 per 750-milliliter bottle.

"It doesn't have the national brand recognition, but there is intrigue because it's made here in Indianapolis," Arnold said. "We let customers taste it in the store, and we have had a great response. I've been carrying it for less than a month and it has sold a few cases."

U.S. vodka sales totaled more than $4 billion in 2007, with super-premium brands like Heartland's expanding 38 percent, according to the Distilled Spirits Council of the United States. All told, vodka accounts for more than a quarter of the distilled spirits sold nationwide each year.

That popularity is the reason Hobson chose vodka as his first product. Another advantage: He can make a batch in just 10 to 12 days.

"Whiskey and bourbon have to age for up to five years," Hobson said. "These are ideas for us in the pipeline, but it's going to take a while."

Despite the quick turnaround, Hobson doesn't rush the process, distilling each batch six times and filtering it twice. He has five part-time employees for bottling, labeling and packaging--a process made more complicated by Hobson's decision to use old-school copper wire and wax seals to cover the bottles' corks.

Made as needed, each batch produces 1,000 liters of liquor, or about 220 cases, Hobson said. Indianapolis-based Olinger Distributing Co. LLC has shipped out 2,400 bottles of Indiana Vodka since February.

"There are a lot of vodkas out there, but since Stuart's product was locally made and he had been a retailer, I said 'OK, we'll try it,'" said Jim Dixon, Olinger's vice president of sales. "After I visited the facility and ... ultimately tasted the product, I was sold."

Since Olinger also carries Bloomington-based Oliver Winery's goods, the distributor has seen evidence of Hoosiers supporting local products.

"Other than picking the worst year in the last 30 years to open a business, we are doing OK," Hobson said. "We market ourselves as a local alternative to the imported brands, and many restaurants, nightclubs and customers are responding to that."

Hobson said social networking sites like Facebook and MySpace have been successful marketing outlets. After advertising on Facebook's Indianapolis network, HeartlandDistillers.com gained nearly 700 hits.

"I also like getting out and meeting and greeting retailers," Hobson said. "It's a plus for me because, as the owner, I can get out and shake hands. Larger, multinational companies don't have that tool."

In such a rapidly growing market, standing out is a key to competing with brands like Absolut and Smirnoff, said Bill Owens, president and founder of the American Distilling Institute, a California-based trade group for 165 artisan distillers nationwide. The challenge for members is not making the products, he said, but marketing them.

"I tell new distillers to distill two days a week and sell three days a week," he said. "They also have to make sure to think about marketing locally and not globally. They have to separate themselves from the large companies."

Hobson believes 30 years of regional winery and microbrewery progression birthed the current boom in craft distilleries. Since most of the microdistilleries have been open less than five years, sharing experiences through groups like ADI plays a key role in staying afloat, he said.

"We are on a little renaissance of artisan distillation," Owens said.

Heartland isn't the only Hoosier member of the craft distilling group. Southern Indiana-based Starlight Distillery, a division of Huber's Orchard and Winery, began making brandy in 2001.

Late this summer, Hobson plans to add to his company's product mix, introducing a Heartland gin, followed by absinthe, an herb-derived spirit. In the next five years, Hobson said, he would like to expand to include dark spirits, such as whiskey.

"Next year, we also plan to expand regionally," he said. "We've had a small interest from other states, but we can't handle that yet. Hopefully, we can expand our product line and grow each product in volume."

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