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For what’s likely the first time in post-Prohibition history, one independent distiller in Pennsylvania acquired another — and one of the industry’s local pioneers is involved.
When Robert Cassell co-founded Philadelphia Distilling and created Bluecoat gin back in 2005, he was instrumental in rewriting Pa. liquor laws, which helped open the floodgates for the commonwealth’s 140-plus distilleries. Earlier this year, Philadelphia Distilling was sold to Kentucky-based Heaven Hill, putting Bluecoat in a position to become a nationally recognized brand.
Meanwhile, Cassell is now president of Millstone Spirits Group, which in March announced an acquisition of its own: it bought Bucks County’s Faber Distilling.
Industry experts believe the business deal is one of the few — if not the inaugural one — of its kind. Mergers at this scale just haven’t happened yet in the craft spirits world like they have in craft beer.
The move dramatically expands Millstone’s offerings beyond what it already makes at New Liberty Distillery in Kensington, like Kinsey whiskey and American Liquor Company (ALCO) canned cocktails.
“It turns us from this small, cute boutique company to a company that has … a diverse portfolio and a big bottling operation,” Cassell told Billy Penn. “We have $7 bottles of vodka, then we have $90 bottles of whiskey — it’s something you normally only see at a much larger company, being able to have that level of diversity.”
The $1.4 million winning bid via bankruptcy auction netted Millstone the full line of spirits and all production assets from Faber Liquors and Midnight Madness Distilling LLC, which also includes a 160,000-square-foot former cigar-rolling building turned production facility in Trumbauersville.
Faber made an early splash when it began operating in 2012, gaining a reputation as a more consumer-friendly option in the local craft spirits space. Its wide array of products were affordable — even cheap, by artisan standards.
The price points were largely achievable because Faber didn’t actually distill its own alcohol so much as add flavorings, then locally bottle the result.
Cassel said he plans to keep the Faber name, but with a slight facelift to that process. “There’s enough scale to this that I can add to both the idea of what they had, plus a craft element to it of us making more of the spirits from scratch,” he said.
The new facility has two high-speed bottling lines capable of filling 150 to 200 bottles each minute. With expanding resources in distribution and production, Cassell projects that between New Liberty and Faber, Millstone can offer upwards of 100,000 nine-liter cases throughout bars, restaurants, and liquor stores across the Mid Atlantic this year.
“It is such a fun opportunity because, frankly, there’s not a template to go from,” Cassell said.
Hitting the ‘regional’ sweet spot
Cofounded by Cassell alongside his uncle Andrew Auwerda and other partners, Philadelphia Distilling was the first in Pennsylvania to receive a post-Prohibition distillery license.
In 2016, it was sold to Miami-based ownership group Samson & Surrey. It might be tempting to draw a parallel to the craft beer industry, where fans of independent breweries often resent “big beer” swooping in to buy out their favorite local hang. But not much changed, per Auwerda.
“To me it was a great thing for Bluecoat, it was a step up,” said Auwerda, who stayed on as president during the Samson & Surrey acquisition. “We had aspirations to be — they still do, and I still believe they will get there — the No. 1 selling premium gin in America.”
With the Heaven Hill purchase this winter, though, Auwerda moved on to pursue an as-yet undisclosed new distilling venture
“Now with Heaven Hill, the truth is there is no local ownership. No one is hiding from that,” Auwerda said. “We understand there will be some people that push back and don’t like it, and I understand that and respect that.”
And for the time being, Philadelphia Distilling is here to stay in its Fishtown location.
“I would wish most people — including Philadelphians and Pennsylvanians — to look at this as an American success story that worked, and continues to work,” Auwerda said.
Cassell, who departed Philadelphia Distilling in 2013, agrees.
“You look at it and go, ‘Wow, that’s something you created from zero,’” Cassell said. “Now that’s actually owned by a big company? You know it’s not going to ever totally go away. You know there’s going to be an origin to that brand and product that’s going to sustain now for a really long time.”
Selling out to bigger and bigger ownership groups is the more common path. Cassell hopes Millstone’s purchase of Faber forges an alternative route to business sustainability.
“The goal is to be a regional spirits company, but small enough that we can still be nimble,” said Cassell, who said he wouldn’t rule out another local acquisition. “And that’s where we really want to go.”