Industry Review Series: Scott Harris of Catoctin Creek

Thoroughbred's Marketing Director Ted Hissey recently interviewed Scott Harris, co-founder of the successful Catoctin Creek Distillery in Purcellville, VA. Scott shares some great stories and insights about Catoctin Creek and the distilling business.

Ted Hissey: Scott, thanks for taking the time to talk with me. I understand you were recently in Italy.

Scott Harris: Yes, second trip over there. We’ve been in business there for a couple years, and they have a nice little distributor that works with us and I got to visit and do some master classes. It’s a beautiful country with really nice people. It was a great trip.

Ted Hissey: Welcome home. Let’s go back to the beginning. What was your original inspiration to open a distillery? How did it all come about?

Scott Harris: Our desire to open the distillery came out of a simple love of two things. The spirits, rye whiskey in particular, and the history that rye whiskey played in the state of Virginia. Both my wife Becky and I are history buffs, and we both were doing research into the different types of whiskeys that were available in the Commonwealth back in the old days, and decided we wanted to start a business that represented that. Becky and I both worked for 20 years in other industries- I was a government contractor and Becky was in manufacturing processes and so we really wanted to parlay those skills into a new career – distilling whiskey. And, at the time in 2010, no one was really doing it in our area so this seemed like a really unique, cool business to start out with.

Ted Hissey: Where did your interest in spirits and whiskey come from? I understand the history piece, what about the whiskey?

Scott Harris: So, I like to tell people 20 years of government contracting taught me a great love of whiskey.

Ted Hissey: A survival tactic, I get it.

Scott Harris: Absolutely it is. The long and short of it is, I was just a great consumer of whiskey products. I had enjoyed drinking all kinds of scotch and bourbon and, growing up in Germany as a kid, spirits are much more a part of the food culture on a day to day basis than they are over here. So schnapps and liqueurs and all kinds of fruit brandies and things that I’ve had all my life – those things I really enjoyed. When we decided that we wanted to start a second career, despite the fact that I had some wine background in my history, it wasn’t a winery that I wanted to start here in Loudon County. There are 40 plus wineries – you can’t throw a rock without hitting a winery and so I thought there’s got to be something a little different. So, a distillery really jumped out at me.

Ted Hissey: How did your friends and family react when you told them you were going to leave a fairly lucrative job and start a distillery?

Scott Harris: Everybody pretty much resoundingly thought I was f-ing crazy, [laughs] and it was only when we started to get some success that they said, “Well this thing might have some legs”. And then the excitement – they started to get excited about it. But I don’t think too many people in my friends and family circle really thought that this thing would work.

Ted Hissey: And, was Becky there from day one? Were you two totally in this together or did one have to influence the other more? How did that dynamic work?

Scott Harris: Yeah, that’s a great question and may be one of the things I’m most pleased with having done all this is – from day one, Becky was supportive but skeptical, understandably skeptical. So, she said, “This is a great dream, but you need to write a business plan”. So, she brought me back to ground truth and I wrote a business plan. And she said, “This is great, and it looks like you’ve really thought through all of the angles but we need to see if we can get financing”. So, we went to the bank and miraculously, we did get financing and at that point it became real. It’s like, okay, now we have the money, we’re really going to do this. And there was no hesitation from then on from Becky.

The agreement was that she was going to work full time at the distillery for no salary while I continued to work my day job until we could get this thing off the ground. And she basically did that and I saw her great level of commitment. My fear was the first time that things got really hard, as I knew they would, some crisis or something comes up, my fear was that Becky would say, “Alright, well this was your dream and I’m out, I’m done”. And, to see her dig in and solve the problem and say we’re in this together, was not just a boost for the business, but a boost for our marriage. It really said we are a team here, and we’re going to do this together, come what may. And so, from that perspective, it’s been a great blessing to start this business with her.

Ted Hissey: That’s great. What was that first crisis or first point that you had – maybe not doubts but you first realized – hey, this isn’t going to be all that easy?

Scott Harris: Yeah, I think our first big challenge was the Virginia ABC. They have a twice a year process for getting selected to be put on their shelves. And if you miss the February meeting then you wait until the November meeting. As a new business with zero cash flow, we needed to have a product on the shelves, in Virginia, to start our business. It was just that simple – there was no other avenue open to us. No distributor would take us until we had at least some kind of state presence, and we couldn’t sell out of the distillery at the time, because the laws wouldn’t allow it. So, all that said, we really needed that first meeting. We took all three of our products down there and it was so early, we had only just started producing in January and this is only February.

Scott Harris: So, we had spent eleven months getting licensed and were now producing in January of 2010 and we had a February meeting with the Virginia ABC – so we barely had any products at all. We had a clear white spirit, moonshine basically. We had a gin and we had a very, very young, one-and-a-half-month old rye whiskey. We didn’t’ even have labels. So, I literally printed the labels on inkjet paper and cut them out and glued them with Elmer’s glue onto the bottles. And took those down to the Virginia ABC.

When we were done with the meeting, several weeks later we got a call from them and they said, “We’ve selected one of your products of the three you presented, to be on the shelf”. And we were like, “Hooray, we’ve got a customer”. And then they said, “And it’s the whiskey”. And we were like, “Oh, no. How are we gonna do it? We don’t have time, it takes time.” So, we had to figure it out. We basically had to get very young product onto the shelf, but it had to be good enough quality that people would buy it and continue to buy it. And, so finding our way through that was very difficult. But then, that opened the door to the next round, we were able to get the gin listed, and the next round we were able to get the moonshine listed. So, it opened the door. But, at that time, it was like, “Holy crap, what are we gonna do?” So, that was our first big real challenge, I think.

Ted Hissey: Did the fact that you were a Virginia company help a lot with the ABC?

Scott Harris: It did, it did. I mean, in all honesty, Virginia does give some preference to local producers. So, from that perspective, it did help a bit, yeah.

Ted Hissey: With all the craft brands out there now, how do you explain why Catoctin Creek is different, here’s why you should consider us, here’s our point of difference or differences.

Scott Harris: I think the key brand takeaway we always talk about with our whiskey is, first and foremost, we make our whiskey from scratch. And, that’s really important because not everybody does. Every day we bring in raw fresh grain, and we mash and ferment and distill. And so, it is truly crafted by us. It is a Virginia whiskey. So, Virginia has a very great history of producing whiskey in the United States. It’s the birthplace of American whiskey and we want to tell that story using organic and local grain.

I think with those two points, we’ve hit the biggest part of our message and then, it’s the finest whiskey coming out of Virginia. It’s Virginia’s most awarded whiskey, and so we’re really proud of that. It’s nice to see when we go international, someplace like London or Milan and people enjoy the whiskey and people say, “This is really amazing stuff.” So, that gives me some confidence that we’re doing something right there.

Ted Hissey: Do you adapt the story when you go international? Or even to Ohio or California or wherever you go – Virginia isn’t going to play quite as strongly there so how do you adjust the story?

Scott Harris: Believe it or not, it does. It does play well. So, people in Milan, people in Berlin, people in California – they understand Virginia. It doesn’t take too much discussion to get people talking about Virginia. Recall that Virginia has had one of the most successful state advertising campaigns for decades – the Virginia is for Lovers campaign. And we can leverage that knowledge in the industry. I think apart from Virginia, the only other state with as much knowledge in an international setting is Texas. And so when we start talking about Virginia, we can mention horse farms and George Washington and the rolling hills of the Appalachian Mountains and I think people begin to get it right away. Even John Denver sang about it. So, it’s pretty easy to evoke those pictures in people’s minds and then I put whiskey right down in the middle of that.

Ted Hissey: You’ve been in business now almost eight years. What’s been the most surprising thing over that time period?

Scott Harris: On the bad surprise side, I never realized how hard this job would be. Had I known it, maybe I would have decided it was too hard and not started it. So, I’m glad I didn’t know because I do love this job but it is extremely challenging. I think in the challenge – therein lies the rewards. So that, when we do have success in the marketplace, it is truly rewarding. It has been a feat of great energy to make things happen.

So, from that perspective, the challenges bring us some of the greatest satisfaction as well. On the good side, I never would have guessed we would be an international brand like we are, that people would notice what we’re doing in this tiny little distillery in the middle of Purcellville, Virginia. So, from that perspective, I’m glad that resonates with people when they try the liquid, that they love it. That’s probably one of my greatest pleasures in doing this, is that it does universally make people happy.

Ted Hissey: How did the international piece come about? Was that something you pursued fairly aggressively or did somebody come to you? It’s relatively early to be going international.

Scott Harris: Yeah, it actually is a little bit of both. In some cases, like Singapore, they came to us and we were able to fill an order and we built a nice business in doing so. In other cases like Europe, I pursued it myself, fairly aggressively but we were able to do so in ways – using state grants and things like that to help defer the cost of the travel and things like that. It becomes a break-even to go overseas and look for new customers. So, the European market was four years in the building, trying to get an established set of distributors over there.

Ted Hissey: I’m curious about the relationships among craft distillers. How often do you all meet? Do you share a lot of best practice or is it becoming much more competitive?

Scott Harris: There’s definitely a collaborative element to it, knowing of course that we’re all rooting for our own companies first. It’s easier to collaborate with people who aren’t doing the exact same thing that you’re doing. Or who are doing it in a different region than where you are. So, a local fruit brandy maker in Portland Oregon – it’s much easier to have a discussion with someone like that than it is if somebody’s just sitting in your back yard, more or less copying your playbook. Not that anybody’s doing that with us but you understand my point.

At the state level, we talk amongst ourselves in the guild meetings, things like that and we try to promote the industry as a whole but nobody’s divulging company secrets or even certain accounts they might get into or things like that. So, there’s a little bit of sharing but we’re still competitive with each other as well.

Ted Hissey: That makes sense. What’s the one thing you wish you knew in 2010 or 2011 that if you had known would have really helped you?

Scott Harris: Branding. Branding. Branding. It’s got to be tight and it’s got to be sexy from the get-go. And we didn’t really appreciate that because we didn’t come from that background – a marketing background. For us, we thought, okay, we’re going to make the most beautiful liquid on the earth and it really doesn’t matter what the bottle is. In fact, in our minds at the time, it was cool to have an understated bottle. But especially in some of my trips going over to Europe, I really learned that – sort of a sledgehammer to the forehead – that we needed to dramatically improve our branding and packaging. . And now I look back at our old branding and I’m embarrassed by it. It’s like watching yourself on television or something, it makes me cringe.

Ted Hissey: You have to turn away.

Scott Harris: Yes, and I was at this Berlin bar show and an Irish bartender who had a big bar on the Champs-Elysees in Paris, took a sample and drank it and said, “This is really beautiful stuff but I would never have your bottles in my bar because of this label”. And at the time, I came home and I was crushed by his comment. I told Becky. And she said, “You know what Scott? He did you a favor. He told you the truth”. And I had to suck it up and realize, yeah, he’s right. So, that’s the biggest thing I didn’t know at the time but now I have a great appreciation for it.

Ted Hissey: Great learning. Moving to a different topic, how did the Constellation Partnership develop? That was real positive for Catoctin, and how did it come about?

Scott Harris: Actually, one of our investors, just a fellow who lives in our town, read about them in the Wall Street Journal and did an unsolicited telephone call to Constellation and said, “Hey, you need to know about Catoctin Creek. Becky and I weren’t looking at it at the time, he just did that on his own and Constellation called us and we had some meetings. At first, it was like, “Well, you guys are nice people, but we’re really not interested”. And then at one point, they made us an offer for some minority investment but it wasn’t a great fit and we at the time said, “No, I think we’re going to have to pass”.

And so, we did and then a year went by and they came back and said, “Hey, we’re still here, we’re still interested and here’s a different set of rules we’d like you to consider. And at that time, we were saying, “Ok, now I think we’re good here and this is gonna be a good fit for both of us and our investors”. So, we went and made that deal.

Ted Hissey: One more question and then I’ll let you go. When you and Becky look into the future, if you look five or ten years out, what’s your measurement of success going to be for Catoctin Creek – I don’t mean an exit strategy, like you’re going to sell it and make la hundred million dollars, but what’s your vision for what this brand can be?

Scott Harris: We would love to be in every state in the US and on every bar in America. Maybe not every bar will have us but we want to be relatively ubiquitous in the nation and in a few countries overseas. That would be fantastic. I think that would be success for us. In the next ten years, I anticipate there will be some consolidation and some mergers and some distilleries will go out of business. The strong will stay in business and the weaker will perish and in some ways, I do think those cycles are healthy. Hopefully the value of the juice we’re making – we’ll focus on quality foremost above everything else and hopefully that will be enough to keep us in the game and making some excellent Virginia rye spirits.

Ted Hissey: Terrific. Well, Scott, I really appreciate your time and continued success for you and Becky with Catoctin Creek.