Rebrand for County Craft Distillery
It’s an exciting, challenging time for Jeremiah Soucie. He and his three partners – who also happen to be close family members – completed the purchase of the region’s lone craft distillery in late 2016 and have already embarked on an intensive re-branding, remarketing and revitalization process that will see the newly-minted Kinsip House of Fine Spirits continue to be a market leader in the craft spirits industry and give folks even more of an excuse to visit or move to the Bay of Quinte Region.
The site of the distillery sites on a lush 77-acre property near Bloomfield, and has been in operation since 2012. Initially two Toronto radiologists, Sophia Pantazi and Peter Stroz, opened what was known then as 66 Gilead Distillery, named for the street address of the property.
When the couple was looking to sell, a willing buyer was found in the guise of Soucie, who convinced his wife Sarah Waterston, her brother Michael and his wife Maria Hristova to back the venture, now formally re-dubbed as Kinsip House of Fine Spirits.
“The previous owners had an incredible vision for the project and saw that craft spirits were going to be a big thing. They saw that it was happening in Europe and the United States but there was literally none in Ontario. They really paved the way for what the industry is today. And the timing was perfect for us because at the time they were looking to get out, we were looking for some property with my brother in law and his wife – just to have a place in the country for us all,” he said.
“At the same time I had been looking at opening a distillery in Ottawa, so I had been doing some business planning for the previous couple of years, but it’s a lot harder to do that in a city with all the zoning regulations, plus the costs are so much higher. So we had been looking for only about a week when we saw the distillery was up for sale, which was totally serendipitous. It was just one of those things where we were all around 40, we were all professionals and felt like it presented us all with an opportunity that we were quite excited about.”
Soucie was originally from New Brunswick, moving to Ontario more than two decades ago. He and his family currently live in Ottawa, although he admits he is spending about 80 per cent of his time in Prince Edward County and hopes to move to the community in the very near future.
A critical care paramedic by trade and training, it was a fascination with food and a knowledge that craft spirits was in the process of following local wine and craft beer as the next wave of locally-sourced premium products that consumers were looking for, that encouraged him to look into owning a small-scale distillery.
“I always had a very strong culinary interest and I always played with the idea of going to cooking school. I did go to business school about a decade back, kind of part time while working. I wanted to do something professionally in the culinary world but I had no idea what that meant, although I didn’t think I was going to be a chef in a restaurant. And I know there has been a real focus over the last 10 or 15 years on people wanting to know where food comes from and who makes it and all that stuff. It’s something people are aware of now and it’s transitioned into beverages – first wine, then beer and now spirits,” Soucie explained.
“A lot of people were no longer just taking mass produced gin and mass produced tonic to make a gin and tonic. Now they wanted to know where both the gin and the tonic came from. So it was kind of taking the ideas of locally-sourced food from the culinary world into the bar, and this is something that is becoming widespread all over the world. That’s really why I started looking into the craft spirits world.”
He felt that there were already enough craft beer makers in the Bay of Quinte Region, but knew that craft distilling was still a trend that was, if you excuse the expression, bubbling under the radar a bit. In fact, when 66 Gilead opened in 2012, it was only the second craft distillery in all of Ontario. Soucie admits that the previous owners did a lot of the legwork in terms of approvals and licences in getting the business up and running, but that they were mostly interested in selling from the ‘farm gate’ to locals, as opposed to pushing aggressively to get their products placed with the LCBO.
As part of the revamping of the business operation, Soucie and his partners are currently rebranding some of the core products, including new bottles and new label designs, but also working hard to get them into LCBO stores.
“It’s a busy business but to survive you really need to sell through the LCBO. And we are currently going through the work of introducing the Kinsip brand. And we based the products we’re going to focus on moving forward on the sales over previous years, picking the most successful. We isolated the core of the products and wanted to give a personality to each bottle to help identify them,” he said, adding that they are still selling some product under the 66 Gilead brand, but phasing it out by the summer of 2017. “The new labels will have the address, 66 Gilead, prominently somewhere on the label, so there will still be some continuity. We have two white spirits, which are gin and vodka, and two dark spirits – a rum and a rye. The dark spirits get their colour from the barrel that they’re aged in because everything that comes out of the still is actually white. Right now we have an LCBO listing for the gin and vodka. The gin is galled Juniper’s Witt and our vodka is called Still’s Whisper. And we are also going to soon be relaunching our bitters and our whiskey-infused maple syrup. For the dark spirits, we are keeping the two previous names, the Duck Island Rum and Crimson Rye, but they will have different packaging.”
As with any new enterprise, especially one that is part of a fairly new business sector, there are challenges. One of the biggest has been the way that craft distilleries are taxed. It’s a complicated process that Soucie and his partners are coming to grips with, but it is a situation that is improving as the sector closes ranks and gets better at educating and lobbying the provincial government about the industry, especially the unfair tax burden when compared to the craft beer and wine industry in Ontario.
“It is a growing business and I think the provincial government is starting to understand that. Craft spirit sales were up by 65 per cent at the LCBO last year, but they only represented just under on per cent of total spirits sales. So there is huge demand but very minimal product on the shelves. Over the last few years the wine and craft beer industry received some helpful changes from a taxation standpoint, but spirits has a much newer history. I know it was a huge frustration for the previous owners because changes were promised but never happened. Although they are now,” Soucie explained.
“It actually started as a mark-up at the LCBO, not a tax, because the LCBO is not a government agency and couldn’t levy its own tax. A markup goes from the bottom up and a tax goes from the top down. Last fall, they transformed it to a tax that is collected through the LCBO. So it went from a 141 per cent markup to a 61.5 per cent tax, which means we are saving about $3.50 a bottle based on a $40 bottle at retail. And for this year, retroactive to January 1, there will be a small rebate for craft distillers that will translate to about another $3 to $4. That extra $6 to $7 per bottle is massive for us.
“When we did our business model we didn’t factor in anything changing. It worked, but it was tight for us. So with these changes we’re certainly breathing a lot easier. We don’t have to hit things quite as hard as we planned out of the gate. And we’re also going to get more involved in the industry association to help be more plugged in and connected with the people who have some influence to help our industry.”
At present, besides the four principals, Kinsip has two employees, and will hire two more for the busy summer season. In the near future Soucie said they hope to hire one more full-time equivalent position for the retail component.
“Once those first two products get into the LCBO we have a lot of promotional plans all lined up for the spring and summer. Once we start to see some sales, I hope we can get up to five employees plus ourselves by next year. The taxes are still pretty substantial and frustrating. If we were taxed the same as wineries we could hire four people today and that would be full time jobs. But we’re hoping we can eventually convince them, because if we can really grow our business, the tax revenue will come, plus we will be providing jobs,” he said.
For more information on Kinsip House of Fine Spirits, visit www.kinsip.ca.