SCOTT DETROW, HOST:
This past week, we visited an American company which uses American ingredients to make a quintessentially American product.
SCOTT HARRIS: Thanks for coming, you guys.
(SOUNDBITE OF FORKLIFT BEEPING)
BECKY HARRIS: Happy to have you here (ph).
S HARRIS: That's our forklift noise here.
B HARRIS: (Laughter).
DETROW: Listen, it's always a hardship to report on whiskey.
S HARRIS: Yeah, right?
B HARRIS: Yes, lots.
DETROW: I'm happy to be here.
S HARRIS: Yeah.
B HARRIS: Hardship to make, too.
(LAUGHTER)
DETROW: Catoctin Creek Distilling Company operates out of an old brick building that was once a Buick dealership on Main Street in Purcellville, Virginia. Becky and Scott Harris are the husband and wife team behind the business.
S HARRIS: Becky is the chief distiller president of the company. And she's a chemical engineer, and so she does all of the production scheduling and work with production. And then I'm the books guy.
DETROW: The books are trickier these days. The first hundred days of the second Trump administration has brought new tariffs and threats of tariffs, which have upended the spirits industry in the U.S. It is, in some ways, a replay of the first Trump administration. And in recent years, Catoctin Creek has had to change its business plans over and over again. The Harrises are used to changing course, though. They founded the company 16 years ago when both of them were decades into completely different careers - Scott as a government contractor and Becky as a chemical engineer, which prepped her to become the company's master distiller.
B HARRIS: People have been making whiskey with almost nothing for hundreds of years. And so, you know, we kind of came at it with that aspect. I was not a big whiskey drinker before this, so I kind of came at it openly with, OK, what do I like as a person who's not a traditional whiskey drinker?
DETROW: As we talk, Becky walks over to a still, picks up a small tulip-shaped glass and pulls a few ounces of clear liquid from a tap on its side.
B HARRIS: So what I look for is I just look for, is it clear? What's this smell like? It smells - if you smell it, you'll smell - like, it's almost a bready, kind of, really gorgeous, grainy smell. That's very - a little sweet on the back side. And what I'm looking for is that kind of sweet, cereal grain goodness.
DETROW: The grain is rye. The product is rye whiskey. Catoctin Creek sources its rye from in-state in Virginia.
S HARRIS: So this is grain that was grown along the Rappahannock River near the Chesapeake Bay. And this is 100% rye, and then we will load up the mash tank with that grain and hot boiling water - 600 gallons of hot boiling water. That makes your porridge, right? So now we've got the porridge being made.
DETROW: The porridge becomes like a cake batter that goes into the fermenter, where the combination of starch, sugar, yeast and enzymes create alcohol. After a few days of fermenting, it's ready to distill. They remove the alcohol from the mash and it's ready to go into the barrels.
S HARRIS: And that's where it develops all that beautiful color. About 50% of the flavor of whiskey is from the barrel, actually. You're enjoying nice glass of white oak when you drink whiskey.
DETROW: The distillation may be a straightforward, if delicate, process. The business math is anything but. Only 10% of that raw material actually becomes whiskey. And because of all the regulations and taxes around the sale of liquor, the price that somebody pays for a bottle of the whiskey gets split up many different ways.
S HARRIS: So, you know, the margin starts to get really, really small, and so it is a very difficult business. But as an entrepreneur, you're always a little bit crazy, and you're like, but I want to do it anyway.
DETROW: It's a business with a lot of risk in it, especially that ultimate risk - how will the whiskey taste years down the line after the barreling process? Those risks and bets have gotten a lot tougher over the past decade.
S HARRIS: This is not our first do-si-do with tariffs.
DETROW: About 10 years ago, Catoctin Creek was expanding its business into European markets - countries like Italy, Germany and the Netherlands. Becky and Scott were riding the wave of a cocktail boom.
S HARRIS: So...
DETROW: And this is kind of the, like, "Mad Men" classic...
S HARRIS: Exactly.
DETROW: ...Cocktails era.
B HARRIS: Yes.
S HARRIS: I mean, it is really funny, but, I mean, "Mad Men," the show, really, really influenced culture and created that renaissance. And so, you know, that was a good year for us in Europe. And then in 2017, you know, the first Trump administration issued their steel and aluminum tariffs, right? And the Europeans retaliated with whiskey tariffs. So basically, overnight, our products went from being approximately 50 euros a bottle to 75 euros a bottle, right? And that put it out of reach. So our sales the next year went to zero.
DETROW: And how quickly - as soon as those tariffs went into place, how quickly did you say, oh, our sales are plummeting?
S HARRIS: Right away. We never got another order again from Europe...
DETROW: Really?
S HARRIS: ...After that.
DETROW: New European whiskey companies moved into the void, and smaller American distillers like Catoctin Creek have been crowded out of those markets ever since. Then, of course, came COVID, but when global trade began to return to normal, Scott and Becky turned their attention closer to home.
S HARRIS: We decided to pursue two other markets, so we went into Canada and Mexico.
DETROW: And then Trump returned to the White House and right off the bat, began issuing major tariff threats against Canada and Mexico.
S HARRIS: My Mexican distributor, we were expecting a big order in the first part of the year, and we have yet to get that order. And they've just gone silent. There aren't any tariffs on Mexico right now, but, you know, if they were to buy that product and then 30 days from now, the administration decides to put tariffs on, then they're, you know, screwed. So they don't want to do it.
DETROW: But tariffs don't just affect where and how they can sell their products. Becky and Scott say they're also feeling the sting of tariffs on the supply side. Catoctin Creek's biggest cost is its glass bottles.
B HARRIS: We actually buy our glass domestically. We have a supplier in Pennsylvania. We work with them. We've been working with them for many years. As soon as talk starts coming of tariffs, one of the first things that we noticed was that our next glass order kept sliding back down the production schedule, right? It - suddenly, it's not coming in January. Oh, it's coming in March.
S HARRIS: June.
B HARRIS: Now it's coming in June.
DETROW: They say other companies moved their glass orders to American manufacturers to avoid tariffs on imported bottles, and that meant Catoctin Creek's orders were delayed.
S HARRIS: We're a relatively small customer, you know, with a small production run so we keep getting sort of just pushed down the line. But the irony of it then, is that the small business that never bought any foreign glass is now having to buy glass from China at 107% tariff.
B HARRIS: And so you're going, what do we do? We have to bite the bullet. Our costs go up more because of that, and it just makes it that much harder for us.
DETROW: This is good news for the American glass company in this conversation, I guess.
B HARRIS: I hope so.
S HARRIS: Yeah.
B HARRIS: I mean, I really...
S HARRIS: Yeah.
B HARRIS: ...Do. I hope...
S HARRIS: And...
B HARRIS: ...They're doing well.
S HARRIS: ...There's a case - I mean, it is good news for them because there's a case of, you know, a manufacturer that was able through whatever, you know, economies to stick it out and hold on.
B HARRIS: Now we just hope that what doesn't happen is that they start raising their prices because their competition is now, you know, higher priced.
DETROW: Scott says all of the back and forth on tariffs, all the hemming and hawing it causes, it takes a toll.
S HARRIS: I mean, that's what business hates most - right? - is uncertainty. And we are living in peak uncertainty right now.
(SOUNDBITE OF GLASS CLINKLING)
S HARRIS: So this is our bottling machine over here. This is called a Borelli. It's...
DETROW: We head to the back of the distillery to see those glass bottles from Pennsylvania. They're loaded into a whirring, circling steel and glass conveyor belt that leaps to life.
(SOUNDBITE OF GLASS CLINKING)
S HARRIS: We put empty bottles on the line...
(SOUNDBITE OF GLASS CLINKING)
S HARRIS: ...And so those then will get fed one by one into the first carousel.
DETROW: A burst of liquid cleans the inside. Then it's flipped back over and filled with liquor. The bottle rattles over down the conveyor belt where it's corked.
(SOUNDBITE OF GLASS CLINKING)
DETROW: Then the machine slaps a label on it.
(SOUNDBITE OF MACHINE CLICKING)
DETROW: And eventually, it's kicked out to a spinning platter of freshly bottled spirits, ready to be packed on a pallet and shipped to a distributor. We say goodbye to Becky and Scott as they continue their work. Becky is preparing for meetings, and Scott's getting ready for a business trip the next day.
B HARRIS: We both go on the road to promote the product. You know, people want to meet the makers. And the parts where we do get to interact with people who are actually drinking it is really the fun part.
S HARRIS: Yeah, it is.
B HARRIS: You know, that's where you get to go and meet new people, and that's kind of what makes all the other headaches worth it.
DETROW: Well, thanks for showing us around and talking about tariffs and rye.
S HARRIS: Yeah. Yeah.
B HARRIS: (Laughter).
S HARRIS: More rye, less tariffs.
B HARRIS: (Laughter). Yeah, amen to that.
DETROW: That's Becky and Scott Harris, the co-owners of the Catoctin Creek Distillery in Purcellville, Virginia.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
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