Giving It a Shot: Traverse City Whiskey’s whirlwind growth means operations expansion

It all began as a hobby.

In 2012, Traverse City Whiskey Co. was launched by three friends who shared a love of whiskey and a disenchantment with corporate life.
Eight years later, the company is the largest craft spirits distillery in the state of Michigan. 2020 promises even more growth, including a new distilling facility on Leelanau Peninsula and expansions to at least three new markets.

Co-owner Chris Frederickson, who founded TC Whiskey with his business partners, Jared Rapp and Moti Goldring, still can’t quite believe the meteoric rise his brand has seen over the past eight years.

“We were just whiskey aficionados at the time,” Frederickson said of the company’s inception. “We were working corporate jobs, but we were getting burned out by the corporate hustle. I was traveling all the time, on the road five days a week as a management consultant. Both Jared and Moti were practicing attorneys. We were looking for a distraction, a hobby, anything to get us away from the daily grind.”

One day, sorting through family artifacts at his family’s cherry farm in Empire, Frederickson came upon a diamond in the rough: a set of distilling patents from his great grandfather, who had once worked as a chemical engineer for Dow. The patents were for distilling techniques and dated back to the United States prohibition era. They were enough to put a seed of an idea into Frederickson’s brain.

Even still, Frederickson stresses that he, Rapp, and Goldring never saw the business as anything more than a small passion project early on. In fact, during the first days of the company, TC Whiskey wasn’t even doing everything on its own. Instead, the business teamed up with a contract distiller in the Ann Arbor area to get its inaugural products to store shelves.

“We created our own bourbon and shipped the contract distiller product, which they bottled for us,” Frederickson said. “Then we entered that bottle into distribution under the TC Whiskey brand name.”

It wasn’t until the end of 2013 that Traverse City Whiskey found its first official home. That property, a former Traverse City Light & Power building at 201 E. 14th St., remains the company’s stillhouse and primary tasting room to this day. By the end of 2014, Frederickson and company had sourced equipment to the location – including a column still, the most crucial piece of any distiller’s infrastructure – and were distilling and bottling on site. In January 2015, the tasting room officially opened its doors to the public.

The company has seen a whirlwind of growth since then – some of it unanticipated. Looking back, Frederickson admits that he and his business partners made a few mistakes: namely, not giving themselves enough room to grow with their marquee in-town location.

Chris Frederickson measures the proof of a sampling of whiskey.

“We realized that there is a very big difference between a whiskey distillery and a vodka distillery,” Frederickson said about his spirit of choice, which must be aged in barrels to allow for maturation and flavor profile. “Barrels take up a lot of room.”

Frederickson says that the accumulation of barrels to keep up with production demands moved TC Whiskey out of the 14th Street building three years earlier than expected.

Currently, most of the company’s operations take place at a significantly larger facility on Robinson Road, near the base of Leelanau Peninsula. There, TC Whiskey does all of its barrel storage and bottling. The 14th Street location remains a tasting room and the hub of the company’s distillery operations.

“All of our distilling equipment is plumbed at that location downtown,” Frederickson said. “And the one rule of thumb in distilling is, if you don’t have to move it, don’t.”

One of the most notable changes coming in 2020 is that the company will soon be able to handle all of its operations – from distilling to aging to bottling – at a single location. In 2018, the company purchased the old Cherry Growers Inc. facility at 9440 S. Center Highway in Leelanau County. The 31,000 square-foot facility sits on 35 acres of land, which Frederickson says will give TC Whiskey plenty of room to grow its operations in the future.

For now, the company is in the process of “retrofitting and reviving” the facility. This year, the first phase of construction will be to prepare the facility to be the central hub for TC Whiskey’s distilling operations. That work will include the construction of a 35-foot glass tower at the front of the building, to show off the new crown jewel of the company’s assets: a colossal, state-of-the-art still made by Louisville’s Vendome Copper & Brass Works – the “Ferrari of distilling equipment,” Frederickson said.

“Our current still is capable of producing between two and three barrels of whiskey per day,” he said. “This new equipment is capable of producing up to 67 barrels a day.”

TC Whiskey has plans for a second phase of construction, adding a sizable visitor center. However, Frederickson says those plans are probably still two or three years off. In 2020, the company will simply move out of its Robinson Road location and into the old Cherry Growers facility. The East 14th Street location will continue to operate as a tasting room and will be used as a spot for the company to distill more “experimental projects” in smaller batches. Examples might include non-whiskey products like gin and brandy.

The mission, according to Frederickson, is to take everything to the next level in 2020. “We are in the process of building the largest family-owned distillery north of Kentucky,” he said.

Thanks to a substantial (if temporary) break in federal excise taxes for small distilleries, TC Whiskey has been on what Fredrickson calls “a bottling rampage” as of late. The old excise tax was between $11 and $12 per proof gallon (a universal distilling metric equal to one gallon of product at 100 proof).

The new tax is between $2 an $3 per proof gallon. Since one proof gallon only gives TC Whiskey about two to three bottles of product, Frederickson says the tax break has had “an enormous impact on the business.” The resulting spike in production is not only catalyzing sales growth in the company’s existing markets – which in 2019 included 26 states and four countries – but also paving the way for additional expansions in 2020. This year, the plan is for the TC Whiskey brand to make its debut in three more states: Ohio, Pennsylvania, and Mississippi.

All the growth led TC Whiskey, at the end of last year, to appoint its first-ever chief financial officer. Filling the role is Andrea Yorgy, who brings not just CPA and MBA credentials to the table, but also a history of building distillery brands into major industry forces.

“Andrea has already supported another brand that has had crazy, crazy growth, called Angel’s Envy Bourbon,” Fredrickson said. “She worked with them from startup until they were acquired by Bacardi a few years ago. So, she’s already experienced and led a company through a hyper-growth phase, and that makes her a very valuable asset to our team.”

Making the Whiskey of the North

Traverse City Whiskey’s trademarked slogan is “Whiskey of the North,” and the company is taking that motto to heart. In addition to all the growth the distillery has planned for 2020, Frederickson says TC Whiskey is also “in the middle of a long-term study to understand how our northern climate impacts evaporation in the distilling process.”

“All of the data that the market has right now is based on Kentucky and Tennessee, because that’s where most of the whiskey in the world lives,” Frederickson said. “There are more (bourbon and whiskey) barrels in Kentucky than people. So that geographic area is the baseline for data as it relates to evaporation for the industry as a whole, across the globe.”

Understanding evaporation is crucial for whiskey distillers, because it impacts what happens to their product when it goes into barrels to age. Over the years, Frederickson says he and his team have noticed that Traverse City’s distinctly non-Kentuckian climate conditions mean that barrel evaporation here plays out much differently than it would in, say, Bourbon County.

“There are two components living in a barrel: water and alcohol,” Frederickson said. “In Kentucky, water evaporates first, which means that when you open a barrel after several years, you have a higher proof of alcohol than you had going in. When we put whiskey in the barrels on day one, it’s at 120 proof. We have not opened more than a few barrels at more than 117 or 118 proof. So, we lose alcohol before water (in the evaporation process), and it’s because of our moisture, our relative humidity, and our colder climate. So that’s something we’re researching as part of our process.”

Going forward, TC Whiskey wants to blaze the trail for other northern climate whiskey producers. Providing new data benchmarks for evaporation, based on northern Michigan climate rather than Kentucky climate, is the way the company hopes to take up that leadership mantle.

“With these trials, we’re doing something special that no one north of Kentucky is doing,” Frederickson said. “We are owning the environment and putting these barrels to the test.”

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