Oregon Distillers Weather Drought, But Face Supply Chain Headwinds

Thinking Tree Spirits.
Stills sit ready for use at Thinking Tree Spirits.

Oregon’s wet climate and water conservation tech helps distillers mitigate the impact of diminishing water resources, but supply chain and distribution issues are still a threat

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Making beer and wine is a water-intensive process — using up to five liters of water to produce one liter of the finished product. But it’s not nearly as thirsty as distilling liquor: a 2020 report by the Beverage Industry Environmental Roundtable (BIER) found that distilleries use 37 liters of water to produce one liter of spirit on average.

For Kaylon McAlister, chief distiller at Thinking Tree Spirits in Eugene, rising global temperatures and drought conditions have been cause to get creative.

At Thinking Tree, hot water boiled for the distillation process doesn’t just go down the drain. Instead, it’s pumped through the building’s concrete slab floors. That cools the water back down and serves as a heating system for the building. Once the water is chilled, it circulates back into the condenser for re-use in the distilling process.

KaylonMcAlister, chief distiller at Thinking Tree Spirits. Credit Thinking Tree Spirits 

Drought may not be impacting Oregon distillers in the same way it has in other places, such as California, farmers are shifting to drought-resistant crops like agave to sell to distilleries, or South Africa, where distillers are saving water by making ultra high-proof gin.

McAlister says it is only a matter of time, though, and it makes sense to adopt practices that conserve water sooner rather than later.

“The world is drying up, and it isn’t something that’s only happened in the last few years. In Oregon we have a lot of water, but you’d have to be an idiot not to see that it’s a precious resource,” says McAlister.

Tasting room at Thinking Tree Spirits. Credit Thinking Tree Spirits

Alan Dietrich, head distiller at Crater Lake Spirits in Bend, says climate change is continually at the top of his mind as water becomes scarcer. For now, however, the amount of consolidation within the spirits industry – smaller brands being purchased by national brands like Tito’s – is the more immediate threat to his business.

Dietrich says that while small craft distilleries got a bump during the COVID-19 pandemic, consumers have begun turning back to larger brands at bars and restaurants. He chalks this up to restaurant staffing shortages, and purchasers preferring to buy in bulk rather than curate an expensive spirits list.

“I would say that the number of brands that went out of business pales in comparison to the amount of control that was consolidated within the biggest brands,” Dietrich says. “They’ve just consolidated their hold on most of the on-premises market. Even brands like Brown Forman and Jack Daniels are down. You would never think that Jack Daniels could ever take a hit, but that’s where we are.”

For now, he says, the path to success for Oregon distilleries lies in convincing restaurants to champion small-batch spirits. He says preparing for climate change is always top-of-mind. He says that as drought conditions worsen across the globe, Oregon distilleries could get a leg up on its larger competitors as large-scale distilling becomes more expensive. The more drought occurs, the better positioned Oregon’s remaining brands will be.

“It could give us a competitive edge,” says Dietrich. “Right now, every little drop helps.”

Brad Irwin, owner of Oregon Spirit Distillers in Bend and president of the Oregon Distillers Guild, says that for now, global supply chain issues are the biggest pain point for Oregon distillers. After three years of growth leading up to the COVID-19 pandemic, and a high volume of in-store sales during the pandemic, Oregon’s small but mighty craft distilleries now report material shortages and lower sales volumes.

Oregon Spirit Distillers sources 95% of its grains from Oregon, but Irwin says bottles and corks from Europe make craft spirit production highly dependent on the global supply chain.

“Our last shipment of glass literally sat floating outside of the Port of Seattle for three months. That represents nearly 20% of our sales lost in 2023. It has been the biggest impact that we’ve seen in the last couple of years,” says Irwin. “Some of our members have what we’re calling our COVID bottles, which means whatever bottles we were able to find.”

Irwin says while the looming threat of climate change is often on his mind, Oregon’s wetter climate has meant Oregon distillers haven’t faced the arid conditions forcing other distillers into a corner – yet.

“I think it could be foreshadowing of what’s to come, but I don’t see any Oregon distillers turning to agave any time soon,” says Irwin.

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