The serendipitous story of Adirondack Distilling

UTICA — “It started with a glass of vodka,” recalls Jordan Karp, president of Adirondack Distilling Co., Inc. “At the time, I was a political consultant. While sitting in my Washington, D.C. office late one evening in 2010 bemoaning clients’ complaints, it dawned on me that I could make a better vodka than I was then consuming.”

Karp decided then and there he could distill a better concoction. “The story took a … [serendipitous] turn,” he continues. “I called a friend in Utica, Steve Cox, who was an Oneida County assistant district attorney and pitched the idea to him. Let’s just say that Steve’s initial response was less than enthusiastic. [Subsequently], he had a conversation with Bruce Elwell, who is a physician in Barneveld. Bruce and his wife Anita loved the idea of creating a hand-crafted, distilling company right in Utica. After multiple discussions, drafting a business plan, lining up financing, and my attending the Cornell Distillation School, the three of us incorporated the company in 2011. Bruce bought a building at 601 Varick St. that August, and we spent a year refurbishing the property, which had been built in 1920 for a bank. Adirondack released the first batch, which was vodka, in November 2012; followed that in the summer of 2013 with gin; and released the ‘601 Bourbon’ the following year.”

Karp’s dream of becoming a distiller of spirits is part of a tradition dating back to 9th century Russia with the first documented production of vodka. Records confirm that alcohol wasn’t distilled in Western Europe until four centuries later. At that time, the art of distilling spirits was confined to medieval monasteries for use as a medicinal elixir. (The product was also used as an ingredient in the production of gunpowder.) The practice passed from the monastic to the secular three centuries later as confirmed by the records of the Guild of Surgeon Barbers, which held a monopoly on production.

In 18th-century America, distilling whiskey was very popular. During and after the Revolutionary War, whiskey was used not only to cheer up the imbiber, but it also served as a form of currency. No less a dignitary than George Washington operated a large distillery at Mount Vernon. The drink was so popular that President Washington imposed a federal tax on distillers in an effort to generate revenue to pay off the national debt. The resistance to his tax, labeled the “Whiskey Rebellion,” climaxed in 1794 when the president led 13,000 militiamen to suppress the insurgency.

The locavore movement
is currently experiencing another rebellion, this time against large beverage and food processors who distribute products that are too often not tasty, distinctive, or healthful. Many call it the locavore revolution where consumers disdain the industrial-food system, preferring to eat and drink natural food and beverages produced or grown locally. The U.S. Department of Agriculture Research Service confirms that in the last 20 years “direct-agricultural sales” have more than doubled; the number of farmers’ markets has grown four-fold; and community-supported agriculture, where consumers invest in a farm’s harvest, has grown 250 percent. Some call locavore a movement; to others it’s an ethos.

“Three trends have helped us to launch a distillery in Utica,” posits Karp. “First is the locavore movement, which favors hand-crafted, artisanal products. Our customers appreciate that we make our liquors in small batches by hand. The staff doesn’t rely on computers to control the process. While we understand the science of distillation, the only controls employed are gauges which reflect temperature and pressure; determining when a batch is ready is a true art form. To me, the process is a real throw-back.”

Second, Karp expresses kudos to New York State for being in the forefront of modifying legislation to entice more entrepreneurs to create distilleries. “The [state] legislature and the governor have turned the role of government upside down. Traditionally, government officials have focused on creating regulations and restrictions. New York has a different approach that started with the Farm Distillery Act [of 2007]: it recognizes that small-batch distillers (under 35,000 gallons a year) create jobs, foster tourism, and put money in the pockets of local farmers. This approach has pushed the State Liquor Authority to lower the expense of obtaining a license [from $65,000 to $1,500] and loosened the restrictions on how a distillery can operate,” he says.

The Farm Distillery Act allows small distilleries that use at least 75-percent New York–grown products to make any spirits they like; sell their products in bottles not larger than one quart directly to anyone in the state licensed to buy, which includes direct to consumers, wineries, and breweries; sell at farmers’ markets, the State Fair, and county fairs; and sell in bulk to other distilleries and wineries for use in combined spirits. In under a decade, New York has seen the number of distilleries grow from just a few to 54 at latest count. During the same period, the number of distilleries nationally grew from just a few to more than 800, according to the American Craft Spirits Association. The state is not resting on its laurels. Gov. Andrew Cuomo and state legislative leaders recently forged an agreement for more changes to the state’s Alcoholic Beverage Control Law, including expanding Sunday sales, reducing paperwork for craft manufacturers, and further reducing some fees.

The third trend in Adirondack’s favor is the advance of technology. “Thanks to technology, we can locate a business in Utica and sell anywhere in the world,” asserts Karp. “Adirondack is already distributing its products in the U.S., Canada, and Israel. Exporting has big potential for us, because there is no federal-excise tax on shipping out of the country and American-made products have a certain cachet globally. The advent of social media gives a small company like ours the ability reach customers anywhere, anytime.”

In just four years since the release of the first batch of spirits, Adirondack Distilling has grown rapidly. “Last year, we produced 6,000 cases (six bottles/750 ml. to a case), and this year we are projecting to double that. The company now employs five full-time and three part-time people, and I think we’ll need to hire another three to four employers within the next six months. Adirondack utilizes two sales channels: direct sales and distributors. We’re penetrating the New York [City] metro market through the Royal Wine Corp. and utilizing our own salesforce for the rest of the state. We’re in talks to extend our distribution to New England, the Middle Atlantic States, and Florida to reach the snowbirds. I even have a request from Russia for 80,000 bottles. With our current capacity to produce 400,000 bottles annually, we can easily support the additional sales.”

Company details
Adirondack Distilling Co. is a sub-S corporation that started with the three founders as stockholders. Cox has subsequently turned his stock into the company treasury, leaving Karp and Elwell as the remaining stockholders. The building at 601 Varick St. contains 6,000 square feet on two floors, and the company leases an additional 10,000 square feet across the street for storage. Adirondack Distilling uses corn grown and milled within 100 miles of the plant for all of its liquors — vodka, gin, white whisky, and bourbon — and relies on White American Oak for aging. The products are gluten-free and certified kosher under the supervision of the Orthodox Union. 

The company’s startup costs totaled $675,000 for the equipment, working capital, and inventory, financed by a loan from Adirondack Bank. Karp says that the still alone cost $200,000 and took nine months to build. The Business Journal estimates that the firm generated revenue of about $400,000 in 2015.

“Our strategy is to continue growing by expanding both the quantity of our production and by introducing new products,” says Karp. “For example, we have straight bourbon aging now in casks, which should be released soon. We’re also partnering with Good Nature Brewing in Hamilton [in Madison County] to take their unfermented beer to produce a single-malt whiskey.”

Karp continues, “The company has plenty of opportunities to grow domestically by expanding our distributor channel. In order to do this, we first go to the store owners to schedule a tasting. I call it hand-to-hand proselytizing. We also promote through social media and attend farmers’ markets and a few major shows. Our pricing strategy of approximately $25 retail for a 750 ml. bottle of vodka is designed to introduce the beverage by encouraging consumer trials. The international market is particularly attractive because there is no federal-excise tax, [currently $13.50 per-proof-gallon, higher for bourbon], when we export our spirits. In addition, American–made products have a certain cachet that attracts … [foreign] buyers… As for expanding further, the company has the capacity to increase our annual production to 750,000 bottles by installing a second still. The only headwind we face [internationally] at the moment is the strength of the American dollar.”

The quality of Adirondack Distilling’s spirits is also helping to drive sales: ADK Vodka has won numerous awards since its launch, including the silver at the 2014 World Vodka Awards and the Double Gold Medal at the 2013 American Wine & Spirits Society (New York). The ADK Gin took the 2014 Silver Award at the New York Wine & Spirits Society Competition; the 1,000 Stills White Whisky in 2014 garnered gold medals at the New York Wine & Spirits Competition and at the SIP International Spirits Competition; and the 601 Bourbon took a silver medal in 2015 at the San Francisco World Spirits Competition.

Adirondack leadership
Karp was born and grew up on Long Island where both of his parents were entrepreneurs. He attended Tufts University on a hockey scholarship. He served as a Democratic political consultant in Washington, D.C. until his decision to follow in his parent’s entrepreneurial footsteps. Karp, his wife, and son live in New Hartford.

The company COO is Jennifer Romeo Cohen, who started her business career as an independent insurance agent for Met Life. After one year, she became an owner and COO of Xpress Auto Care, a chain of express-auto-lube shops. Cohen joined Adirondack Distilling in July 2015.

Dr. Elwell is a physician at the MVHS Medical Group (Barneveld office) with specialties in family and geriatric medicine.

Cox, a 1981 graduate of SUNY Albany and the State University of New York at Buffalo, where he earned his J.D. degree in 1996, has served as an Oneida County assistant district attorney since January 1997.

Karp, 36, says he has the ideal job. “I proved to myself that I could make a better vodka, I’m thrilled to be my own boss building a business with a great future, and I’m required to drink on the job,” quips the company president with a smile. “It doesn’t get better than that.”

Contact Poltenson at npoltenson@cnybj.com