First Whiskey Distillery in State Since Prohibition

Bozeman’s Roughstock Brand Upholds an American Tradition

BY MIKE COMSTOCK

I recently toured and met the owners of the new Roughstock Whiskey Distillery in Bozeman, husband and wife Bryan and Keri Schultz. It was an educational experience—our group helped bottle 20 cases (240 fifths) of whiskey headed for Tennessee, home of the iconic brand Jack Daniels. We even signed our names and wrote the batch number on each label. Afterwards, we taste-tested the product, a fun exercise.
While whiskey bottling and tasting can be fun, the business can be difficult to start up and run successfully. It seems that every small town in Montana has a beer brewery. And there are a half dozen vodka distilleries in the Northwest, some as close as Rigby and Helena, but whiskey distilleries are few and far between, and Roughstock is the first whiskey produced in Montana since Prohibition.

While researching whiskey production in the United States, I uncovered some interesting historical facts. George Washington, our first president, levied the first excise tax against small business in the U.S. in 1791 upon the producers of whiskey. In western Pennsylvania, distillers refused to pay the tax, and in 1794 when Washington sent U.S. marshals to collect taxes, they were met by 500 armed citizens. This uprising became known as the Whiskey Rebellion. Eventually, the army was sent in to suppress the violence, and the tax was repealed in 1800 by President Thomas Jefferson.

 It also turns out George Washington built the largest whiskey distillery in the country in 1797 at Mount Vernon. That whiskey was made with corn and rye grown at his plantation.  

Washington died two years later in 1799 when the distillery produced 11,000 gallons of whiskey. Operations continued until 1814 when a fire destroyed the building. But, in 2006, the George Washington Distillery was reopened and is in business again today.

Roughstock’s Bryan and Kari Schultz haven’t had to deal with a Whiskey Rebellion, but they’ve met serious challenges getting where they are today. First, there are no recipes or Whiskey for Dummies books out there, and it’s illegal to produce whiskey at home. So the Schultz’s learned, more or less, to distill whiskey during their initial production runs.
Breaking into the whiskey market wasn’t easy either. As the owners explain, it's like trying to start a new automobile manufacturing company. Jack Daniels is the GM of whiskey, and so a goal of capturing just one percent of the U.S. market would be considered wildly successful for Roughstock.
Starting out, state and federal permits must be obtained from the federal departments of Interior and Revenue, and from the state of Montana. Bryan said that the application was over an inch thick and took about a year to complete. Then there was a 90 day review period before the application was approved, and a federal bond had to be posted of $13.50 per gallon of estimated yearly production. At an estimated 5,000 gallons a year, that's an $80,000 bond.

Equipment expenditures also posed a challenge. The copper still in which the distilling takes place was hand-made in Kentucky at a cost of $100,000. The holding tanks, bottling facilities, dozens of oak kegs for aging the whiskey, cooling equipment and other equipment cost another $100,000, so the Schultz’s invested a small fortune in the business before the first bottle of product was distilled. They mortgaged their home, dumped in their life savings, and borrowed from relatives to start the business.  Aside from the high costs, there's also a lot of production and administrative work that the owners do themselves.

Paperwork takes time and effort too—bi-weekly reports, accounting for every bottle sold, and state and federal taxes on every bottle sold. Even the labels on the bottles have to be approved by the government. The retail cost of a fifth of Roughstock whiskey is about $50. But of that cost, federal taxes take about $3, and state taxes about $18. Then there's the retailer’s markup. After production costs, profit per bottle is rather small.

Bryan explains that his production costs are high, but that that's what it takes to make a high grade product. Roughstock differs from most U.S. whiskeys in that it’s made from local Montana barley rather than corn or rye. Quality local grain, a hand-made whiskey process, a custom still, attention to detail, charred oak aging barrels that are only used twice, pure Rocky Mountain water, two distilling cycles, and other processes ensure consistency and quality in every batch, he explains.

Ultimately, it's the love of distilling whiskey that keeps the Shultz's going (even as Kari continues to work at a local Bozeman high-tech that pays the bills and provides health insurance), and their attention to detail has earned Roughstock national attention. Recently, the brand was featured at the Whiskies of the World Expo in San Francisco, and also in April at WhiskeyFest in Chicago. Locally, Roughstock will be on display at the first annual Bozeman Stampede Rodeo at the Fairgrounds on Sweet Pea weekend, August 6-7 (stop by to visit the owners and experience Roughstock first hand).

The Roughstock Distillery is located on Osterman Drive on the East Frontage Road past the Montana Import Group auto dealership.  Their website address is  www.Mon tanaWhiskey.com. Roughstock can now be found in most Bozeman bars and in the local liquor stores. Personally, it is by far my favorite whiskey. Two thumbs up.