Ten years in, Indiana’s craft distillers see fast-growing industry with more potential

Now a decade since Indiana’s craft spirit licenses came online, Hoosier distillers say business is continuing to climb—and there’s more alcohol tourism still untapped.

Although Prohibition ended in 1933, it wasn’t until 2013 that Indiana lawmakers afforded distillers the right to launch craft spirit businesses and sell directly to consumers.

That’s opened doors for dozens of distilleries and tasting rooms across the state, many of which are aiming to become tourist destinations in their own right. To date, regulators have approved more than 70 active permits to let roughly three dozen distilleries make and sell vodka, bourbon, whiskey and other spirits directly to the public, according to Indiana’s Alcohol and Tobacco Commission.

Some were producing beer or wine before artisan permits opened up, but many of the up and coming distillers have only started up within the last few years.

“Distilling has been around in Indiana for a really long time, but for craft distilling—what we consider in the modern sense—it’s really what’s kicked off here in the last ten years thanks to the General Assembly. And since then, there’s been a huge growth in this market,” said Cardinal Spirits co-founder Jeff Wuslich.

“Here we are now, I get to support my family with this. We get to support local farmers, support local manufacturers and cardboard box makers and bottle makers and label printers and local marketing firms,” he continued. “They’ve created this entire industry, and there’s this whole ecosystem around it, which I just think is such a cool success story for Indiana. And there’s still more room to grow.”

A history of Hoosier distilling

Throughout Prohibition, only a handful of distilleries in Kentucky and Tennessee were allowed to operate in the United States, most of them for “medicinal purposes.” After prohibition ended, Kentucky has largely claimed a monopoly on the whiskey industry.

And though Indiana’s neighbors to the south have claimed bourbon fame for the last 70 years, it’s the Hoosier state that has long served as the production powerhouse for companies’ spirits.

The epicenter of production is an 1847 distillery in Lawrenceburg, once known as “Whiskey City, USA,” across the Ohio border from Cincinnati.

The Rossville Distillery was purchased by Seagram’s in 1933 and eventually bought by Midwest Grain Producers in 2011. After a name change, the present-day Ross & Squibb Distillery produces dozens of different liquors, bottled under various big brand names like Angel’s Envy, Bulleit Rye, Ezra Brooks, High West, Seagram’s, Templeton and Tito’s.

Still, it wasn’t until the 2013 legislative session, however, that state lawmakers greenlit the Indiana Artisan Distiller’s Permit, which now allows Hoosier distillers to sell directly to consumers—rather than through a distributor or at grocery stores.

Early permit adopters included Bloomington’s Cardinal Spirits, Bear Wallow in Nashville, Indiana Whiskey Company in South Bend, Huber’s Starlight Distillery in Borden, and Indianapolis’ Hotel Tango Artisan Distillery.

“That word “artisan,” little moniker, was really what changed things,” said Hotel Tango CEO Travis Barnes. Using Midwest-sourced grains, the distillery turned out 1,275 barrels in 2023 for various spirits, including bourbon, rye, vodka, gin, limoncello and cherry liqueur. Opened in September 2014, it’s now one of Indiana’s largest distilleries.

Unlike beer and wine producers, which are allowed to self-distribute, distillers were previously required to go through a distributor in order to sell to bars, restaurants and liquor stores throughout Indiana.

Barnes said the “biggest advantage” of the distilling permits is the elimination of a 30% margin taken by distributors.

“That’s a cost savings when we’re able to sell out of our tasting room,” he said. “It kind of evens the playing field for an upstart distillery to break into the game.”

Widening spirits’ reach

Jeff McCabe, co-founder and executive chairman of Brown County’s Hard Truth Distilling Company, said Indiana’ distillers have already seen “incredible success,” earning national and international recognition for the quality of their spirits.

Even so, McCabe, who also serves as president of the Indiana Distillers Guild, said there’s still “a lot of room for businesses to grow.” Better marketing is high on the guild’s list.

“We’ve got the water, the limestone, the climate, the grain that we need—everything is here. Over the last 10 years, we’ve been able to build an ecosystem here, where we’ve got Indiana farmers who grow our corn and our wheat and our rye, and who are partners in this,” McCabe said. “Now that we’ve got an industry that is getting the kind of attention we’re getting, we can use help promoting what we have going on.”

He pointed to Kentucky and other states that invest “quite heavily” into marketing support for spirits industries.

But for an individual distillery to launch a national campaign is “a huge investment.” McCabe said he wants to see Indiana’s artisan distillers work together with the state “to promote the industry and more tourism.”

“We have the potential to bring a lot of tourists to the state,” he continued. “To promote the industry as a whole helps everybody. And it doesn’t just help the distilleries, it helps that ecosystem — the farmers and all the logistics and everything that it takes to get this done and to support the businesses. It helps everybody.”

Nearby Bear Wallow Distillery—Indiana’s first retail distillery, opened in August 2014—has already doubled the size of its building in Nashville. Owner Susan Spagnuolo said the small distillery’s biggest ask, currently, is the ability to ship spirits.

“Brown County wineries, right across the street from me, can ship, but the state doesn’t let distilleries ship, even after 10 years,” she said. “I’m in a higher tourism area. We have people coming from all over the place, and they get back to where they live and say, ‘Hey, I loved your Gnaw Bone bourbon. Where can I find it?’ And I have to tell them to come back to Indiana.”

Spagnuolo said direct-to-consumer shipping—an option for Hoosier beer and wine producers—would allow small-scale distillers to sell more products and help attract more visitors to the distillery’s taproom. Existing law requiring distillers to ship through a distributor drives down profit margins and precludes many small producers, she noted.

“Alcohol tourism has really changed, and there’s more coming,” Spagnuolo said. “You used to go to Kentucky to find bourbon. And now, we get people coming to Indiana, coming in every day, who just enjoy going to different craft distillers throughout the country and appreciating what’s unique about each one of the places.”

Barnes agreed, emphasizing that for Indiana to stand out as “a hub” for bourbon and spirits production, “it’s going to take a little bit more support from our government.”

“I know that Kentucky has already got a leg up on us, but Indiana has just as long a tradition of distilling spirits,” he said. “Without a little bit of help from the legislature, from the governor’s office, from the tourism chamber, it’s going to continue to just kind of hover at this level.”

That means more “day-to-day changes” to the law, and “spreading the word that, ‘Hey, there’s more than corn in Indiana’—and, oh, by the way, it’s really good corn juice that we’re making here, so come on down and get some.”

“It’s only going to get bigger,” Barnes added. “It’s either invest in Indiana or get left behind Kentucky.”

What’s next for Indiana’s craft distillers

On the legislative front, “there will always be things we want,” McCabe said, “but we’re in this for the long term.”

Changes to Indiana’s alcohol laws often take multiple legislative sessions—meaning several years—to get across the finish line.

McCabe said the guild is especially looking to increase distillers’ access to markets and “simplifying regulations.”

“The laws and regulations for beer, wine and spirits are all very different. There are some really significant differences between what you can and can’t do,” he said. “So why not streamline that, make it simpler for the people who have to regulate the business, and simpler for the people who have to operate those businesses.”

Among ongoing conversations with legislators are requests for more festival permits—which allow distillers to host public tastings and sales outside their taproom—as well as lobbying for direct-to-consumer shipping, though McCabe said “that’s a longer putt and will take longer to do.”

Barnes said he also wants to see spirits “be treated just like a wine or a beer” in Indiana.

“If somebody came onto Hotel Tango’s website and wanted to buy a bottle of bourbon, either in Indiana or out of Indiana, we should be able to do that,” Barnes said, though he acknowledged that laws in other states might still prohibit spirits to be shipped in. “For us to be able to ship, even just in our own state, that would be huge.”

Additionally, he hopes state laws can be loosened to allow distillers to collaborate on spirit concoctions.

“Right now, basically, everything has to be produced from your distillery in order to sell it at your tasting room,” he said. “Well, what if we did a half-barrel of Hotel Tango and a half-barrel of West Fork and created a new product. Why can’t we sell that out of our tasting room? There’s both a historical precedent for that, and I also just think it would build collegiality among the industry. Beer guys are allowed to do this all the time, to collaborate on things. I think we should be able to, also.”

Wuslich, with Cardinal Spirits, lauded Indiana’s craft distilling industry as “an incredible success story for good public-private policy,” but echoed calls for “more parity” with beer breweries and wineries.

“I would love to have the recognition nationally and internationally for the products that we’re producing in Indiana to rival those in Kentucky. I would love for people to understand that when you think about great whiskey and great spirits being made, that you think of Indiana in that list,” Wuslich said.

“I’d love to see us continue to grow partnerships with our ag industry in Indiana, so that it becomes a real symbiotic relationship, where they’re growing products for us to use in our distilleries and to get them to consumers, and so everybody can really see all the amazing produce and products that we grow and produce here,” he added. “It’s going to take more time and work, but I think we can get a really healthy and competitive environment where we can get all of our spirits to the marketplace.”

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.