By: Tod Stewart
A 30-year friendship solidified by a passion for whisky, a desire to put this passion into practise, and a determination to break new distilling ground in an environment where practically everything was against them – welcome to the story of Barry Bernstein and Barry Stein (affectionally known a “the two Barrys”) and the evolution of Ontario’s Still Waters Distillery. It’s a story that should inspire craft distillers around the world – and entrepreneurial types thinking about joining the ranks.
Today, Still Waters Distillery continues to grow and its flagship – STALK&BARREL Canadian Whisky – should soon be available nationally across Canada, and plans are in the works to expand distribution into the US market. Beverage Master Magazine caught up with the Barrys to talk about past challenges, current successes, and future plans.
* BM – Beverage Master Magazine
BM: Initially, your venture involved importing whisky in bulk for blending. And, again, if my recollection is correct, you ran into some regulatory hurdles. Assuming I’m correct on both counts, can you elaborate a bit on this part of your past?
Barry Stein: Our initial venture, in 2005, was as an independent bottler of scotch for the Canadian market. We were importing single casks of scotch and bottling here in Canada. We were, at first, restricted to selling scotch in an “adulterated” fashion – by adding one per cent domestic whisky to comply with an obscure Canadian law. This meant we couldn’t call it scotch, which presented some marketing challenges. After much negotiation, we were able to finally get permission to bottle without blending, but that was short lived as the Scotch Whisky Association brought in rules that prohibited the bulk export of scotch for bottling purposes outside of Scotland.
BM: When did you decide to actually create a distillery? Though the regulatory landscape for small distillers has changed a bit over the years, what challenges did you face – both physically and regulatory – in setting up your operation?
Barry Bernstein: While struggling with our importing business, we were also seeing the growing small distillery industry in the US. It was clear that our importing business was not sustainable, with the regulatory restrictions, and we thought there was an opportunity to be the first craft distillery in Ontario and one of the first in Canada. We opened the doors to our distillery in 2009 after a great deal of work with the Canada Revenue Agency – CRA – on federal licensing.
BM: Where there issues with the CRA?
Barry Bernstein: The local CRA office had never seen a small scale distillery, and it required extensive documentation and due diligence. The Alcohol and Gaming Commission of Ontario – AGCO – had rules that only allowed large distilleries to sell direct to the public, and the only sales channel available to us, The Liquor Control Board of Ontario – LCBO – hadn’t dealt with a small local spirits producer, and it gave us no preferential treatment, expecting the same from us as it would a large multinational brand. Our local municipality relied on building code regulations that only described large scale distilleries, which forced us to invest heavily in facility upgrades. At every level of government there were significant challenges, but the constant “you cannot do that” only strengthened our resolve. We were determined to prove everyone wrong.
BM: Was your aim always to make whisky, or were you interested in a broader range of spirits – or was it the case that you were more or less forced to produce other spirits until your whisky was legally old enough to be called whisky?
Barry Stein: When we started, our focus was on whisky. But, by Canadian law, that requires a minimum of three years maturation, so we made vodka as well. By virtue of being the first in Ontario, we also attracted attention from others looking to get into the business, and we did both contract distilling and bottling. This gave us an opportunity to make different vodkas, gins, whiskies, liqueurs, and so forth.
BM: Sounds like you certainly gave the various authorities pause to reconsider what could and couldn’t be done. Have things got any easier for craft distillers from a regulatory standpoint?
Barry Stein: The ability to sell direct, which didn’t exist when we started, was significant. There has been some small wins on the taxation front, but it is still very difficult to be profitable. For us, the most significant changes have been the growth of the industry. Everyone now understands what a craft distiller is, and it is a lot easier to make noise as a group than as an individual.
Barry Bernstein: Our biggest challenge is taxation, federally and provincially, that take the vast majority of the sale proceeds. Canadian excise rates for spirits are ridiculously high. We’d like to see reduced rates across the board, and special rates or graduated rates for small producers, similar to what is in the US – or even in Canada for wine and beer producers. Though small producers can now sell direct to the public – which took years of work to make happen – significant distribution can only occur through the government run liquor stores, and it remains a difficult sales channel for a small player.
BM: Would tapping into the export market help you bypass the stranglehold of Canadian liquor boards?
Barry Bernstein: My role at Still Waters Distillery is primarily new business development, and I can say there are plans being made as we speak to be launched in the USA, which we are very excited about. We should have more details on this later on this year. In the meantime, I think it’s important that we focus on core competencies, and that is making truly great tasting Canadian whisky. We have perfected the STALK&BARREL Canadian Whisky blend and this brand is gaining significant distribution, which includes Ontario, Newfoundland, New Brunswick, and Alberta. Hopefully STALK&BARREL will be nationally distributed across Canada the near future.
BM: It’s said there’s strength in numbers. Have you collaborated with other distilleries or joined any trade organizations that are pushing for things like excise parity?
Barry Stein: We founded the Ontario Craft Distillers Association and are a member of national organizations. These organizations are more directly helpful to our clients, the brand owners, but that indirectly helps us. The more our clients prosper, the better we do.
BM: Are there any plans to expand production facilities in the future, or perhaps change locations?
Barry Stein: Yes, although we are still working on a plan. We have been increasing our production capacity incrementally. Our space is very tight and is an ongoing challenge. We actually have three facilities (production, bonded storage and non-bonded storage) and are looking at consolidating in a single location. We expect to have some definite plans by the end of year.
BM: Can you give us a sneak peek as to what new SWD spirits may be in the works?
Barry Bernstein: I think right now we are focusing on the rebrand of STALK&BARREL Canadian Whisky. This brand is definitely getting noticed by whisky lovers and cocktail enthusiasts. STALK&BARREL Canadian Whisky is now the Official Canadian whisky of Golf Canada, so with the RBC Canadian Open in June, and CP Women’s Open in August, we are ramping up production to meet the anticipated demand.
With the ongoing expansion of the Still Waters Distillery – and growing market for its balanced, warm, vanilla and butterscotch-tinged flagship STALK&BARREL Canadian Whisky, not to mention the Golf Canada partnership – the “two Barrys” appear to have hit a Canadian distilling hole-in-one.
