Holladay Happy Hour
Sharing the history and happenings of the Holladay Distillery, but also life in the liquor industry as a whole. The industry is an ever-changing and extremely complex landscape in many ways, but also a lot of fun. Join us as we explore thoughts, ideas, and stories from all corners of the industry. On top of all that, spirit tastings, cocktail creations, and so much more!
©️2024 Holladay Distillery Weston, MO. Drink Responsibly. Drive Responsibly.
Holladay Happy Hour
The Hidden World of Distilleries and Their Finances
(00:00 - 00:58) Intro
(00:58 - 02:25) Blueberry Fields Forever
- 2 oz Ben Holladay Bottled-In-Bond Bourbon
- 3/4 oz Lemon Juice
- 3/4 oz Blueberry Syrup
- Garnish with a lemon peel and blueberries
(02:25 - 08:55) Welcome Mike Frizzell (CFO of the Holladay Distillery)
(08:55 - 14:30) Alcohol taxes
(14:30 - 16:00) Google Sheets vs Excel
(16:00 - 19:00) Holladay Soft Red Bottled-In-Bond Bourbon (May 2023)
(19:00 - 21:28) What is your go-to bourbon?
(21:28 - 25:08) Kyle's favorite Mike story
(25:08 - 31:00) Taxes on imports and aging bourbon
(31:00 - 37:15) Congeners in alcohol
(37:15 - 38:00) Side drink merch is here!
©️2024 Holladay Distillery Weston, MO. Drink Responsibly. Drive Responsibly.
Music. Welcome to Holiday Happy Hour presented by the Holiday Distillery in Weston, missouri. I'm Jordan and I've got the whole pod squad here today, plus a special guest. But first things first, brendan, i'm going to need you to come over here and tell me what we're drinking today.
Speaker 2:It's beautiful, so today we have the blueberry fields forever. This is our Bend Holiday Bourbon Smash for the spring and summer. So it is two ounces of Bend Holiday Bottled and Bonn Bourbon, three-quarter ounce of blueberry syrup, three-quarter ounce of lemon juice, and it's garnished with a lemon peel and some blueberries.
Speaker 1:Delicious. That color is very, very vibrant.
Speaker 3:Oh yeah, if that's not a change of a season, i don't know what it is. It's perfect, right? Yep, very good.
Speaker 1:I feel like we're ready for summer now.
Speaker 3:It's killer.
Speaker 1:It is Well. We have delicious cocktails, We have friends here and we have our very special guest, Mike Frizzell, the CFO of the Holiday Distillery. Mike, welcome to Holiday Happy Hour.
Speaker 4:Thank you. Thanks for having me, mr Moneybags, yeah, in the house.
Speaker 1:Someone's got to keep us honest around here. Yeah, keep us in line, mike, you've been here how many years now?
Speaker 4:It'll be 28 years in September.
Speaker 1:Wow, that's pretty incredible That is a run man.
Speaker 4:Most people in this room aren't that old. I'm not sure. I think that's not true.
Speaker 3:I mean we'll take it, though, guys, definitely take it. Yeah, i mean I'm dusty over here, but you're a little younger than me, kyle, that's fine.
Speaker 1:I had a few years on you.
Speaker 5:I feel old, so that's all that matters.
Speaker 3:I'd do it Now everyone's going to know by the way, that's true.
Speaker 1:Yeah, exposing yourself.
Speaker 3:Yep.
Speaker 1:So we thought it would be fun today to bring Mike on, because we're always talking about marketing and design and just making bourbon. But there are a lot of things that go into pain for these things, and also checks and balances and things, paperwork, things that we don't always have to bother ourselves with.
Speaker 5:So I mean Mike's from a different world. You guys are marketing. I'm still in operations. I still actually do some of those things.
Speaker 4:Yeah, i'll get these fair share of the paperwork?
Speaker 1:Yeah, i think I've just kind of figured Kyle's one of us now, I mean I am.
Speaker 5:it's just not for one of you, but that's tech. I don't want to say that, no that's not true. No, yes, they live in the world of marketing puffery and Mike lives in the world of spreadsheets.
Speaker 1:That's true, yes, yeah. So when you started here, mike, what was your first role?
Speaker 4:I actually came in as a consultant to help install a computer system the new computer system.
Speaker 1:they were getting Interesting.
Speaker 4:And it's interesting that we're still in that same computer system.
Speaker 3:28 years later. I don't know if that's interesting or like what is happening right now.
Speaker 4:So we're in the process of looking at changing that out right now. So it's had a good life here.
Speaker 1:Is that the AS 400?
Speaker 4:The AS 400, the bottle soft software that we use. That is all the production.
Speaker 3:A long run for software.
Speaker 4:Yeah, very long run for software.
Speaker 1:Yeah, so software. So when you started in software, how did you end up on the accounting side? Or is that kind of two and one?
Speaker 4:Yeah, I actually went to school and had an accounting degree and an MBA in finance. So I that's my background Came here just to help install the financial side of the package and then got roped into doing some of the production stuff and then eventually worked my way into getting a job here in the accounting department and doing various roles there over the years 28 years later 28 years later There we are.
Speaker 1:Where did you go to school?
Speaker 4:I did my undergrad at Missouri Western, up in St Joe, and got my MBA from Rockhurst.
Speaker 1:Nice, nice Local. I like that. Are you from Kansas City area originally?
Speaker 4:I am not. I am from North Central Missouri, small town, Chilli Coffee.
Speaker 1:Oh, heard of it. Yep, i mean, that's not a small town, isn't it?
Speaker 4:10,000 people.
Speaker 2:Come on.
Speaker 5:Today's standards are small.
Speaker 4:That's a small town.
Speaker 1:Atchison is a small town. Right, That's not my hometown, i know, but that's where you're from.
Speaker 5:I'm sorry to everyone from Atchison who may be listening to this. I did not intend to offend. I'm from Northwest Kansas.
Speaker 2:A very small town, a very small town.
Speaker 4:Like how small?
Speaker 5:Where I went to school was 1500, but that wasn't my hometown. My hometown was actually like 48.
Speaker 2:Oh well that's so.
Speaker 3:Everyone's related in that town. I think They're all Merck lines. Okay, probably, yeah, i mean they're all of yeah, similar Yeah pretty close. I mean, that's a very small town.
Speaker 5:But it's odd, in my hometown there's actually two branches of Merck lines that are not related Different parts of Germany they came from. So, yes, interesting.
Speaker 3:Anyway, wow. So Mike came from the big city.
Speaker 4:The big city, chilli Coffee.
Speaker 3:The big city of Chilli Coffee I like that?
Speaker 1:Yeah Well, interesting. So how did you, i guess, end up in Weston? like working in Weston when you were a consultant? What company were you with at that point?
Speaker 4:I was actually in between jobs. I was offered a promotion to go to New Jersey, decided that was not for me. So I decided to stay in Kansas and find a job And I knew the CFO here at the time. He offered me a job to come up and help install a computer system.
Speaker 1:Just evolve from there. Yeah, nice, that's awesome. And so, as the CFO, do you feel a lot of pressure and wait on your shoulders to keep us all in line and make sure we're watching our budgets.
Speaker 2:Luckily.
Speaker 3:Mike. Mike and team are some of the nicest people I've ever met, by the way. They're on top of everything to keep knuckleheads like me in line, and our teams from you know going too far, doing anything goofy, but they're always available for any questions We ever have. Yeah, i've always said keep the money, people happy and everything.
Speaker 5:I mean I'm rolling, honestly impressed in your salesmanship right now Because that was impressive that you like suck up to try to make sure that he's still on your side.
Speaker 4:I know with Mike that's right here, so this is why it all has to.
Speaker 1:We love working with Mike and we you know what I love the most about working with Mike is he just will say yes to You know, try anything. I guess it is like he'll always support us at our events and whenever I said, hey, mike, do you want to come on the podcast? he was like, well, okay.
Speaker 4:It's about time, free bourbon.
Speaker 1:Yeah, so that's what, that's fun. Step outside of the numbers for a little bit. Yeah, i think he walked in and said, oh, there's video.
Speaker 3:Live until right before we got started, right.
Speaker 1:Yeah, that's the.
Speaker 4:I just hope we don't crash the internet.
Speaker 3:We're probably gonna crash, yeah, i guess so many right now.
Speaker 1:Mm-hmm, I mean.
Speaker 5:I'm honestly appreciative that, like for the first time ever, you know, we're adding more and more layers, right, like first It's just podcasts, then it's video, then it's live, and you know I obviously am not comfortable with all those things, but finally we invited someone. That's equally as uncomfortable.
Speaker 2:I think, with that.
Speaker 5:He's bringing Mike on, so it's, it's good. I enjoy having a fellow, you know, kind of more introverted personality here.
Speaker 1:So yeah, yeah, i think you're actually enjoying it, probably more than you really should.
Speaker 5:Again.
Speaker 1:Finally someone else someone other than me, right See.
Speaker 3:Meanwhile I was looking forward to Mike since the very beginning. I was like, once we get Mike on this podcast, then we've made it. Get the money man in here. Then when the bill comes in for all this extra equipment On location, everything's gonna be fine. That's what that's for.
Speaker 2:Yeah actually doing something you know.
Speaker 1:Well, since you are behind all the money, i want to talk about something kind of more bourbon related and actually spirits in general, but taxes. So, I've been doing a lot of like a lot of research and reading into the history of Alcohol taxes and it's just very interesting. I don't think people really understand, first of all what bonded means so we can talk about that a little bit but also the amount of Liability, i guess, like maybe one warehouse might have for how many taxes that we're on the hook for.
Speaker 4:Yeah, as Jordan mentioned, the barrels right now are in bond, which means we have not paid tax on those. They're covered by our bond. So if something were to happen, barrels were to disappear or whatever, it's covered by our bond. The government would go back and claim against our bond to cover their taxes. So, and the big warehouse, we have what? 10,000 barrels roughly today. So and if those barrels were fully taxed they're around 600 bucks a barrel. So do the math on that real quick. That's a lot of money. It's between the two warehouses right now 16,000, it's roughly 16 million dollars. That's sitting there. Future tax for the government.
Speaker 1:Penny's.
Speaker 3:What a business, that is insane.
Speaker 1:Yeah, that's a lot of money. And I think when somebody looks at a bottle of bourbon and you don't consider all of the time and everything that went into making that bottle of bourbon, i guess, and then the time you have to sit on it and the money, and it's just very interesting.
Speaker 3:Yes, well, we're one of the most regulated and highly taxed industries in the universe, I think, not even the world but the universe.
Speaker 3:So the amount of hoops you jump through and the amount of government groups you have to be a part of, i mean it's, it's a lots for these guys to handle. Obviously it's it's easy to kind of tuck it away and not think about it. For us, i mean, while we know that Mike Laurie, the whole gang, is keeping things straight and never able to tuck it away because that's what they do, it's, it's a lot to take in.
Speaker 5:But I think, clarifying even the tax point a little bit more, like that's what we pay, but that's not like sales tax, that's not like income tax, that's like the specific to alcohol. That is an additional tax the government imposed. That's only on a proofgallon of alcohol, correct?
Speaker 1:Which is also mind blowing, because there's a lot more that goes into it.
Speaker 4:Other taxes along the way as well, that we I am sure There's state excise taxes, local taxes there's a bunch of taxes and alcohol It's the sin tax, basically.
Speaker 5:So the current tax rate is what? 1334 per proofgallon, correct, and a proofgallon is a gallon of liquor at 100 proof. So if you took a gallon of Ben Holiday bonded bourbon or Holiday Soft Red Wheat bonded bourbon, that is a proofgallon, and so we would have to pay $13.34 cents in taxes on that one gallon.
Speaker 1:What about whenever we bottle Rick House? Is that different? since that's, it's a different conversion.
Speaker 5:Great conversion. So you have your proof times your gallon rate. So if you have a gallon of 120 proof alcohol, then it would be one gallon times 1.2. So you'd have 1.2 proof gallons. So it'd be 1.2 times 13.34. So you pay more taxes. the higher on the bottle, the higher the proof is Right.
Speaker 1:Wow, see the things that I don't have to think about and I'm perfectly fine with it.
Speaker 2:That's interesting, that's a lot of money.
Speaker 1:Yeah, wow, so yeah that's a lot to manage on top of everything else. But you must really like numbers, Mike. I'm glad one of us does.
Speaker 4:Some days Depends on the day. We all have the day, all right, that's right, that's right.
Speaker 1:Well, in the history of taxes, it's very interesting that really alcohol tax was the first I'm losing my words here The first.
Speaker 3:I'd give you words. I don't know what they're going to be, though I don't know.
Speaker 1:Syntax, The first tax really. that was even established. Sorry guys, this going live really makes me nervous And looking forward into that, like going into the temperance movement when people were really trying to push on prohibition. it's like, well, wait, we can't do that because we need that money to pay off war debt and to just really function as a society So you can actually thank the income tax for covering that gap. So leading into prohibition shortly before that. that's when the income tax, federal income tax, was established. Is that interesting?
Speaker 5:Wait. So it was established because of prohibition.
Speaker 1:Yes, because they needed money.
Speaker 5:So if we wouldn't have prohibited alcohol, we wouldn't have an income tax.
Speaker 1:I mean just saying Oh man. I blew my mind Not only did we not have booze for several years, but we also And I'm assuming that's why prohibition ended.
Speaker 3:Probably Well.
Speaker 5:I mean, they're among other things, among other things.
Speaker 1:But yeah, so taxes just have a very long history in this country.
Speaker 3:Shouldn't federal tax have gone away then, once prohibition ended?
Speaker 2:I feel like that would have been fair. It would have been, i feel, like taxes never.
Speaker 3:They just keep adding and they don't ever take away. Yeah, that sounds right.
Speaker 4:They never reduce taxes, as you know.
Speaker 1:Yeah, it doesn't seem to go down, it seems to trend up.
Speaker 5:But you know.
Speaker 1:Yeah, so just a little interesting tidbit of information there.
Speaker 5:Yeah.
Speaker 1:Kind of depressing tidbit, but I know everybody can drink to that.
Speaker 5:So let's talk spreadsheets now?
Speaker 1:Yeah, let's move on to Excel.
Speaker 5:Honestly. Okay, Can I talk about that for a second? I do have a question. You count Now that we have someone who's qualified to answer this. Why do accountants hate Google Sheets and love Excel? That is a great question.
Speaker 1:I didn't know that that was a thing.
Speaker 5:Oh man, i sent one spreadsheet over one time to someone in Mike's team and they lost it. That it was a Google Sheet. It was not acceptable. They made fun of me to no end because it wasn't Excel and I didn't get it. What is the Google Sheet, okay, okay, well, that's fair, maybe that there you go, that's like the greatest. Mike comeback ever, that was good.
Speaker 3:Yeah, i will say that Lori works with Google Sheets for me. I think just maybe they don't like you and that's okay. Not everyone likes you It's no big deal Makes sense.
Speaker 4:We should get too far out of our comfort zone. You should know that by now, Yeah that's true.
Speaker 5:I'm assuming the formulas don't quite translate the same and like it's just that there's a lot of things built into.
Speaker 3:They get all Googled when you do it.
Speaker 1:Yes, well, with a Google Sheet too. Anybody can change it if you share it, right, i guess You can lock it down. You can do like a read, only I lock down all my spreadsheets.
Speaker 5:Yeah, i don't want you touching this stuff. I don't want Patrick involved at all. I'm not opening your spreadsheet, that's true. I know you're not, no chance.
Speaker 1:Let me know if I need some out of there. I'm good If he shares it. He's not reading it, That's for sure. Yeah Well, Kyle, something else we're drinking over here.
Speaker 3:Why don't?
Speaker 1:you talk to us about this little guy.
Speaker 5:This is a tasty one, man, yeah, so this one is the Holiday Soft Red, bottled and bond for May of 2023. And so it's going to be bottled, but yeah, that just got cut, filtered to proof. It's really good.
Speaker 2:I don't know, i can't remember all my floors on the breakdown of this.
Speaker 5:I feel like you had six, there's six different floors, but I don't remember the numbers. The first two are the same. And then it's.
Speaker 3:There's a lot of actually it is.
Speaker 5:I have a Google Doc, that or sheet that shows you know each one, the floor breakdowns. Make sure that the label matches, and then how many cases I get from it, how many barrels per case. I do numbers too.
Speaker 1:No.
Speaker 5:Just You know.
Speaker 1:I love that for you, Kyle. Yeah, that's great.
Speaker 5:But yes, i don't remember the floors, so that's where I was going with that.
Speaker 3:Well, that's this batch to me. Compared to even the first one, that was excellent, this is a huge step up to me. I mean, this is fantastic. It's can't wait for this to get in the bottle. Honestly.
Speaker 5:I don't know how to take that. Like you didn't like the first thing I know, i know what you're going for.
Speaker 3:This. This is a whole different deal.
Speaker 4:I mean, he's saying you're getting better, Yeah, it's about time. I think it's.
Speaker 5:I think it's a lot like well, i think it is a lot like what happened with Ben last year, and so that first one we had. you know, for both Ben and software I had a certain number of barrels that were available.
Speaker 3:Jordan will throw something. You talk about the first Ben, she will throw some. No one ever sees that, but it usually happens.
Speaker 1:Yeah, you got to make sure I'm.
Speaker 5:yeah, I get excited, I mean but I I didn't say anything about it. No, but it just. When you have more barrels available, you just have a lot more options and an availability which isn't always a good thing, but in this case, you know, there was a lot of barrels that came came of age on the fourth floor, so I do know that that was the primary floor of this one.
Speaker 1:And yeah, it's just that's good works well So yeah, we got to try this at Rick House proof when Patrick was not here and that made him very upset And I'm sorry about that.
Speaker 2:but it was really not OK.
Speaker 5:Honestly like she's not upset about that.
Speaker 3:Yeah, i was getting pictures and texts from this guy like just mean spirited.
Speaker 1:I think we tried to FaceTime him when he was six hours ahead. Yeah, i'm like sorry about your life.
Speaker 2:For that? No, it is a big time, like I was like OK, let's see how it is.
Speaker 3:That's good, I'll be back.
Speaker 1:It is good. I'm actually really starting to warm up to this whole soft red thing that you're doing here. It's taking a while. Like Patrick said, it's the new baby that lives in the house. You don't really know him Still stranger.
Speaker 2:I don't know that kid I don't know, him You better behave.
Speaker 1:So, yeah, it is good though. That's excellent, very good.
Speaker 4:Very good.
Speaker 3:Mike, what's your go to if you're going to have a cocktail at home, or when you're thinking about all the crap I put you through and you just want to have something delicious to ease your mind Like what would you pour?
Speaker 4:I'm a bourbon guy, OK.
Speaker 5:I like it.
Speaker 4:I like my bourbon cold though, So I put it there.
Speaker 3:There's my son.
Speaker 4:So OK.
Speaker 3:What's your? what's your? go to bourbon.
Speaker 4:Well, of course, has it been as long versus soft red. Well, i haven't. I haven't got a bottle of soft red yet. I'm going to have to do that. Oh my goodness, i get that. I have tasted it.
Speaker 1:It's very good, i'm going to send you home with a little goodie bag for the weekend Here. Mike. I have something to sip on. Do you prefer to drink at 100 proof or bottled in bond, or do you like the Rick House proof one barrel route?
Speaker 4:Uh, the bottle demand is very good. I did try the shorty, though, and the shorty kind of hooked me on the barrel strength.
Speaker 3:So our next barrel or next one barrel selection for this distillery. like the shorty, I think we're going to sell this one, though kind of like one McCormick Lane.
Speaker 5:Yeah.
Speaker 3:Sixteen, charlie 22 is going to be the name of it. It ties into the lot number, our friend Doug Frost. When he came back and tasted things about a year and a half, two years ago, year and a half ago, he selected that one as he was kind of going making his rounds and tasting, making a lot of you know, kind of like, oh, this is good, really good. And he was like whoa, this one, this one. And he like looked at it, he's like 16, charlie 22. This one's ready now, like this is what he called. He called it like a I don't know He has he had Doug words but yeah, i words that sounded like this thing is a delicious whatever.
Speaker 3:Sweet little bourbon. He said something funny and it marked in our brain. I wrote it down. Kyle pulled that now to because we're at that, it's going to be almost seven years.
Speaker 5:It will be seven years two months.
Speaker 3:Wow, this thing is, it's fun.
Speaker 5:Yeah, so he said it was ready a year and a half ago. And so what did we do? We waited, you know, an extra year and a half Like you're really lands.
Speaker 3:You know it cost you bad at that bureau Mike's like you mean we could have made money out of the year and a half Yep.
Speaker 1:Perfect, always looking out. You know I get that. It's old Well that says it's good, it's, good It's I mean yeah it's very good.
Speaker 5:Yeah, We're biased, So yeah, I, of course I enjoy it. My favorite Mike story Can I tell that real quick? Oh yeah, So we were at the initial Ben holiday launch event with our distributor partner here in the state of Missouri And it was, you know, about a year ago And we're here celebrating, went through the tasting and then we had a dinner And I know that this was not not cheap. Probably. We had Wagyu steaks for for everyone And Joe didn't know which kind of get.
Speaker 2:so he had both.
Speaker 5:They had two for both days A strip and a fillet, just in case people didn't know what. Or was it rib eye? I don't know.
Speaker 5:One or the other rib eye and fillet and fillet And so, just in case you know, you were hungry and needed two steaks. So I was sitting at the table with Mike and like I just could feel like he was just conflicted because on one hand he was loving the steaks And it was just so great, But then I could see in his mind he was just thinking about the money, the entire time And he was just so paranoid, Like how much is this costing What?
Speaker 5:what's going on? Why are people leaving steaks over there Like what's?
Speaker 3:Look at all this waste. That was one of the most outstanding dinners I've been at And that's really good, Maybe ever. I mean. That was phenomenal, I mean they slayed cooking those things. They all came out at once. That was a night to remember. That was a lot of fun.
Speaker 4:It was very good. Yes, yeah, mike.
Speaker 3:Mike enjoyed it. That's the thing that's. You have to invite him to things like that to make sure he can show him how awesome it is Have a smile and remember the delicious taste before he gets the bill
Speaker 4:for sure You know, but unfortunately I saw the bill before Right, so let's say that Look at him, He's nervous, he's like oh, it was too soon after he would have thrown up.
Speaker 1:So we have to play that properly.
Speaker 3:You know, but I took a steak home because there was a few left over. Put it in the fridge. I love cold steak and cold pizza the next day. It's me one of my favorite things ever, especially if it's like that, like that steak was phenomenal. And the next day I'm like oh, whatever. And kicking around And sometimes you know, for breakfast throwing in with some eggs or whatever, and all of a sudden, like I smell someone's cooking something, i go downstairs and Brody's my son.
Speaker 3:He's like dad. I just made the best quesadilla ever And he smoked the whole steak in a case. I was like man. if you were my son, like I would throw you right out of the house, right now. I was so sad, but it was a damn good case. Yeah, I did get a piece of it, so that's why you have to mark your leftovers.
Speaker 2:Yeah you have to you know put it down and mark it.
Speaker 4:Mike, did you get leftovers? I did not. I didn't know that was an option.
Speaker 3:I didn't either. We're not going to throw it away. There was steaks everywhere. It was amazing.
Speaker 1:Sorry about that.
Speaker 5:Jordan, you get leftovers. Let's do it again. Steaks are really good leftovers.
Speaker 1:I mean, come on, really, it's a repeat Yeah Well, I'm sure we'll do it again sometime.
Speaker 5:Just because we know numbers doesn't mean we, you know, aren't cool.
Speaker 3:You know, i wish we knew like a wagyu farmer, so we could have a better connection.
Speaker 5:That would be nice if you knew.
Speaker 1:No, that's my family, kyle's life. By the way, i was going to say I've been eating very just.
Speaker 3:He's pretentious when it comes to me.
Speaker 5:I'm not pretentious, it's bad.
Speaker 1:Yeah, yeah, ok, kyle's pretty bougie Yeah, when it comes to food and drink, and Well.
Speaker 5:I've been eating wagyu beef for going on a decade now, like that's just what grew up with.
Speaker 1:So you know before it was like a popular like Yeah, and I did Started raising wagyu.
Speaker 5:and then, yeah, you get accustomed to it, and then the next thing you know, it's the Yes like a love sorry.
Speaker 3:Joe, like I can't you could put a sign on the door. People don't read, especially Joe. He'll probably have his phone ringing here. A second.
Speaker 1:Yeah, it's coming in. I love it. Good job, Joe.
Speaker 3:Yeah, buggy beef and Kyle, yeah, we need some, so let's do it.
Speaker 1:Yes, okay, yeah, brendan's phone in a question over there. Okay, that's a good one. Brendan said he wants Mike to talk a little bit about taxes on imports, imports like five farms and Who songs tequila and kind of what that situation looks like well, the?
Speaker 4:the simple word is the taxes, exactly the same It's. It's the 1334 per gallon, so it doesn't change because it's an import or domestic product. But when the product comes into the US it goes into a customs facility and it's Only when we relieve it from customs that were obligated for the tax we actually pay that tax to the customs As opposed to paying it to TTB. Ttb is the tax and trade bureau. They're part of the Treasury, so It's the same tax rate is just paid to two different people. And Once it comes out of the customs cage we pay tax on. It goes into a tax paid area. We have to keep that segregated from the bonded Area of the warehouse. Bond again means we have not paid tax yet. So and that's?
Speaker 1:on site here, right, that is those areas.
Speaker 4:Yes, okay, and it has to be designated with the government We cannot just move it anywhere in our warehouse that there's yellow tape on the floor, that means it's a tax paid area has to stay within there.
Speaker 3:Yeah, I mean they're like.
Speaker 4:Patrick said there's tons of regulations just piddly stuff like that.
Speaker 3:Yeah, that's segregated the regulations at least. I mean, we've got the old photos. The photo on the front of our soft red has, you know, our barrel truck and a warehouses on it and you could see, you know, the TTB ATF agent at the time. It would have been standing at the door because they had to unlock Yep, you know the warehouses. If you need to get into them, like they're on site, basically monitoring 24-7. At least now We still have government type locks. That's all regulated, but they don't have to, you know, sleep in a cot and wait for us to Get the barrels rolling.
Speaker 3:It's wild.
Speaker 1:Good question, 70s, i think my understanding late wow, brennan was wondering when the Last year was that we had to have, like when that ended when government On-site regulating, i guess that started?
Speaker 3:was that about the switch, where it changed to take TTB And they switched kind of from the ATF and that happened after 9-11.
Speaker 4:That was part of that recent.
Speaker 3:Yeah, I blew that one. I had no idea. That's right before. I got in the business, so that's wild.
Speaker 1:That is wild. Well, even in the 70s, that was 50 years ago, but it doesn't feel like it should be that long ago, you know, but yeah, we definitely don't have them on site anymore. We do have somebody monitoring 24-7 though, so nobody getting any ideas, but we are.
Speaker 5:Are locked down, but just make sure that no one comes in.
Speaker 4:And all the bulk alcohol that comes in here is gauged and We have to report that to the government. There's any losses and if it's over an acceptable limit, We have to pay the tax on it. So We try not to lose product.
Speaker 5:Yeah, so like if a tank accidentally gets left open with a valve on the bottom and it drains the tank, we have to pay taxes on that.
Speaker 4:We can apply if we can document the situation and prove that it was lost. Okay. We can apply for a Forgiveness of tax Okay, they don't have to honor it, but for the most part they do if we've got good documentation of exactly what happened.
Speaker 1:So we had to do that before quite a bit, or?
Speaker 4:Unfortunately.
Speaker 3:I mean it's like double sad. I mean you've got taxes on top of no product.
Speaker 5:Remember he's been here 28 years. I've only been here seven, so you know it could have been in 21 years before that wasn't necessarily because of me.
Speaker 2:So no blame me, i'm operations. Yeah, don't blame me.
Speaker 1:Well, and even so, when a barrel goes in the warehouse and we fill that 53 gallon barrel, we're gonna pay taxes on that entire barrel, correct, regardless of whatever we lose.
Speaker 4:No, we pay tax on the yield that comes out of the. Really.
Speaker 1:Taxes on the whole thing. certain states Okay.
Speaker 5:Yeah, there's certain states that have, like Kentucky, essentially like a property tax of sorts on the barrel right where you have to pay a barrel per year type of thing right. Missouri does not have that.
Speaker 1:Oh wow, Go Missouri.
Speaker 5:Yeah.
Speaker 1:Don't get many ideas.
Speaker 3:That's a perk for now.
Speaker 1:After 20 years never heard that before it probably. I Guess we've never had a 20 year old bourbon that we have bottled and sold right, so we wouldn't.
Speaker 5:It probably depend. Based off of the state would be my assumption, but yeah, hmm See, brendan, or should work in accounting.
Speaker 3:It works in every position possible. for the record, i do not want a 20 year product.
Speaker 5:Now I was like that's gonna be way over over.
Speaker 2:Oh yeah, so we're not doing that.
Speaker 1:Hmm Interesting, we've learned something new. Yeah, Yeah I didn't have that in my history book back when.
Speaker 3:Yeah, then teach us a bourbon storage. Yeah, they should have taught us things that mattered.
Speaker 1:You know, i do have a question for Kyle, a science question go for it. So As much as I'm into the history and the tasting and flavors and the aging process, i am still just like this when it comes to distillation. So one thing in particular that I want to learn about can you talk about congeners?
Speaker 5:Congeners. So Congeners is. So I'll give the definition first. It's very basic. Congeners is what we refer to as anything that's not just plain ethanol. So When you ferment the mash, the yeast does produce other higher alcohols. It produces additional flavor compounds. Those are typically that they're either volatile or non-volatile. If they're volatile they will go through the distillation column, so they're gonna come out the top of the column with the ethanol. So when we run a GC mass spec we send that through and we're looking at how many parts per million of Certain of those compounds. The higher alcohols that make it through the distillation process That's what congeners is is the additional flavor compounds essentially that make it through. That's just not ethanol, and so you can.
Speaker 5:You can change up the congenar profile of your spirit through a ton of different ways. Obviously mashbill, yeast East type fermentations, whether it's hot or cool, long short, as well as the way you distill. That's why every part of our step Process matters, why we try to stay consistent in each part. We want the same congenar profile going into the barrel. The distillation style matters.
Speaker 5:With a column, you you have a certain style. It's a little bit heavier in in nature. With a pot still, you make cuts, and so you kind of discard the heads, you discard the tails. What that means is all those those higher alcohols that are part of the early Boiling point and the the late boiling point. You get rid of them and you only keep the hard switches, the ethanol plus some of the other compounds that are close to that, whereas with the column, still, you don't have that in nature.
Speaker 5:You control that via a couple different ways. Mainly, distillation. Proof is what we we care about, and so that's why we care about distilling it. 120 off the column and 130 off the doubler is we want it to be consistent every single time, because it's a little bit heavier and full-bodied in nature, knowing that we're gonna age it at least six years, and so that's, that's a thought process. So you, you kind of begin with the end in mind of how long are you gonna age it, what are you going to do with that product as you age? is it gonna be a full barrel, whatnot, and and how you want it to end, and then work backwards, and that's how you choose what, what style you, how you distill, how you permit all of that fun stuff.
Speaker 4:So when we originally laid these barrels down, the intention was four years, right So?
Speaker 3:It was three at the very beginning.
Speaker 4:How did that affect your?
Speaker 5:yeah, so it still it, it makes it better. I think, ultimately, when you have younger product, you still, if you go in the style that we do you, you can tend to it. The oak isn't there, the Maturation over time, the oxidation reactions aren't there, and so it's not quite as Rounded and full-bodied in general, and so it's just not. It's just not as flavorful. So going longer with the style that we do, it works. What we're doing is again very traditional bourbon. If you knew that three years was the max that you could do, that's where you would probably change it up. But for us, knowing it was more of like a three years the starting point, and I think, even though we say three years, i think there was probably still the thought that we could age things longer. It just depended on when Mike started complaining about the money in the warehouse.
Speaker 2:So But I think that ultimately, that style.
Speaker 5:It works at three years. It works much better at six ten Range as well. So So, do you change it up for the tenure? then We do not know. So with that one It's gonna be the same basic. Overall process, just kind of giving you a little bit more oak. As well as the, the oxidative oxidative reactions have a current. The oxidative oxidative reactions have occurred over time a little bit longer, so your front-end distillation process, especially because it's column every time.
Speaker 3:That stays consistent. Your contenders added in at that point later ten years versus six, that's all barrel weather.
Speaker 5:Correct. Yeah, yep, some of the heads evaporate in the call are in the barrel as well, and so that's sometimes what you see as well. So some of the earlier ones might be a little bit more heads, like if you were to dump them early. You know we have to figure all this out with our Rai whiskey, patrick. I Keep poking fun at him, he hates Rai whiskey really dislike, and I just keep telling him that I'm not good. We're gonna make one with anybody.
Speaker 3:It's fine. People that like it tip you like oh Well, it's. It's the same people to talk so highly about scotch. Listen, it's fine, she's not for everybody.
Speaker 5:I think it tastes terrible.
Speaker 3:Kyle loves scotch. I actually think he's gonna take an internship over.
Speaker 2:Learn more about having scotch happen.
Speaker 3:So if I could say we're gonna make some scotch here, kyle would be just as frustrated as me hearing about right, just for the record, maybe.
Speaker 1:I forgot that most recently Kyle on a podcast said scotch sucks.
Speaker 5:He did. I did say that That's hilarious.
Speaker 3:I mean I was to Maggie, yeah, she was like oh yeah.
Speaker 5:I mean I don't like it, that's, I don't need their Kyle, i don't even murk it.
Speaker 1:It's not for me.
Speaker 5:That's why we have that new barrel right.
Speaker 1:Yeah, yeah, so we have congeners.
Speaker 5:That's why we have the congenar profile that we do because we're not doing a pot still. So, and no Pete.
Speaker 1:Yeah, no, pete. No, that's a whole another topic for another day. Goodness Scotch is yeah, not for us No.
Speaker 4:Well.
Speaker 3:Oh.
Speaker 1:I forgot to get you guys one of these cool shirts. I need one of these shirts you've got to come by and get your team side drink cozy and team side drink T-shirts at the holiday distillery side drink crew is like really turning into a thing.
Speaker 3:It's a lot of fun It is fun. We just like to have fun, i mean look at us right here, right now, oh fun side drinks.
Speaker 5:I was gonna say but mics have a lot more left in them than ours. He's a rookie, it's fine, he'll get there.
Speaker 3:Yeah, i mean he's done great his first on-camera appearance.
Speaker 5:I'm probably going back to actually like pay taxes, right.
Speaker 4:Today is tax payment.
Speaker 1:You know what I appreciate it more than ever than that you've made the time on tax payment day to come down and be on holiday.
Speaker 4:Happy hour that has to go out early today, so.
Speaker 5:Yeah, that was done on weekend, You know you got it done.
Speaker 3:Yeah, Mike saw it.
Speaker 1:Oh my goodness. Well, you know what? in that case, did we miss anything? Kyle you're gonna come back?
Speaker 3:Okay, we'll see you next week on the cocktail.
Speaker 1:Yeah, next time. All right guys, Well cheers. You.