By Chris Meehan | Sep 18, 2020
El Dorado Hills, California
"We probably have 30 products on the shelf now," says Steller. "So for a small, tiny place, we make a lot of things."
Indeed, the company makes whiskeys, vodkas, gins, liqueurs and other spirits under the Dry Diggings Distillery and Amador Distillery labels as well as private labels for other companies and Steller has even more products in the wings. "We probably have another 10 to 15 products in the back that we haven't even released yet that we already have labels and stuff for."
The large selection is due in part to Dry Diggings' 2016 acquisition of the Amador and Engine 49 brands (under holding company Aurum Sierra), but it's also the result of a business model that looks for niche opportunities.
"We do everything ourselves in-house and every product comes about in a different way. Some of it is personal interest. Some of it is to some extent market-driven," Steller says. "Some of it's cultural or ethnic, or driven by base products that we have available to us. One of the unique things is we make a product called slivovitz, which is a Serb-Croatian traditional spirit -- it's basically plum brandy, but we make it for a specific population that's in our area."
To produce the variety of spirits, the operation has three workhorse stills and two smaller stills, all of which are pot stills. "One of the stills specializes in the gin, one specializes in the brandies and whiskeys or one specializes in the high proofs and the vodkas," says Steller.
"The bulk, because we're up here in wine country, we do a lot of base alcohol production that gets used for ports and brandies and fortification," Steller says. That's just huge volume, but it's not a finished product," Steller says. "We have 120 wineries within about 15 miles of us."
"The work we do for the wine industry probably on a bulk basis is probably close to half of what we do," Steller says. "The private-label stuff that we do is only probably 10 percent or maybe 15 percent of total production."
Given the proximity to all the wineries and Dry Diggings' work for them it shouldn't be a surprise that the company's first spirits were wine-based vodkas. Now Steller says the company produces a variety of vodkas made from everything from wheat to apples.
"Vodka really is defined by the process more than it is the base product. The base part is secondary to the process. A wheat vodka is still distilled above 190 proof to where it's fairly neutral and the differences between the base products -- say apple vodka and grape in our case -- is more subtle than you would have between, say, a wheat whiskey and a rye whiskey because you're retaining more of a base product at a lower alcohol percentage," he explains.
Since Dry Diggings launched, the landscape for distilleries in California has changed tremendously. Consumers' tastes have also changed, Steller notes.
"When we first opened, even when we had the whiskeys and stuff, the call for vodka was considerably higher. It seems like gin has taken a certain part of that segment. Whiskey has definitely taken a big part of that segment, and even some brandies," he says. "During COVID, we've done a couple of the cores and a couple of our specialty brandies and it's interesting. Some people are like, I just want something different. I want something that I can taste and drink and not have it be what I expect. But vodka is always there." He says that these days the company's most popular spirit "day in and out" is Rubicon Rye Whiskey.
Despite growing interest in rye whiskeys across the U.S., there's still a learning curve involved, according to Steller. "We have to talk them into it and when they try it they say, 'That's not what I was expecting.' Right up until a few years ago, when people heard rye whiskey they thought it was all Canadian-style, which has a lot of wheat or different kinds of wheat," he says. "Ours happens to be 100 percent rye -- we don't like anything with the rye in our stuff. . . . Rye has a lot of terroir to where the rye comes from and how it's handled, to where even ryes that are, you know, on the East Coast or the Midwest will be different than the rye on the west end."
As a founding member and executive director of the California Artisanal Distillers Guild who's successfully advocated for changes to California's distilling laws, Steller's also seen other shifts, including the sheer amount of distillers in the state and those who have applied for a distillery license. He estimates that California has issued more than 200 distilling licenses since the Craft Distillers Act of 2015 passed -- even though some may never be used. However, he attests that as in the brewing industry, much of the competition is collegial.
COVID-19 has also had profound impacts on Dry Diggings. "We shut down for probably three months, producing strictly hand sanitizer, and we made enough to store it up and now we've gone back to distilling," Steller says. "Now what we've been doing is catching up on some of our winery work, some of our special project work, and then our long-term projects. That's where we've been able to catch up on some of our whiskey production, but some of our other product lines grew faster than we expected."
Next up: Dry Diggings is opening a restaurant and already has county approval. "Depending on what happens with COVID, here the restaurant and bar industry is nonexistent these days, but I'm moving ahead with the hope that by the time we get construction finished, it will be opened back up again," Steller says.
That could be an important differentiation if COVID rules don't change. "If you own a winery, you can do tastings outside without food, but you can't if you own a brewery or a distillery," Steller bristles. "What's the difference between tasting a glass of wine or tasting a spirit if you're sitting outside? . . . It's a question of who's involved in the wine industry, who has strong lobbies."
Challenges: "Managing growth and capital outlook," Steller says.
Opportunities: "The expansion of the brand in our region," says Steller. "The restaurant and the bar being able to show our product in a cocktail will be a great advancement -- the ability to pair it with, see how our products work and showing people that we're a destination. That's probably the greatest opportunity for us."
Needs: The distillery's biggest upcoming need is "increasing the number of products we put away," says Steller. "So the aging program, the barrel program would be the next thing that we really focus on because it costs a lot of money to put stuff in a warehouse and then leave it to sit there. But we're doing different things to make that come about. Right now, we have no outside money and maybe by the time it gets to that point, we may look at that."
Cover photo by Nick Micheels.