Value Added: Ending a career with a slow gin biz


John Uselton, left, and Michael Lowe opened New Columbia Distillers in the District and produce Green Hat Gin. (Matt McClain/For The Washington Post)
Thomas Heath
Reporter February 10, 2013

I began this column as a tale about starting up a craft distillery in Washington — the city’s first in a century — trying to make a go of the gin business. But this column is also about second careers and giving purpose to retirement.

Michael Lowe, 63, is a former Navy officer who spent 20 years fighting litigation wars as an in-house counsel at Verizon.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade. View Archive

Then he retired and quickly became bored.

“There is only so much yoga you can do,” said the Yale-educated attorney, who I later learned happens to be a neighbor of mine.

Looking for a new project to tackle, he started kicking around some ideas with his son-in-law, John Uselton, 39, who worked for more than a decade in the local restaurant and liquor industries (Obelisk in Northwest Washington and Schneider’s on Capitol Hill, respectively).

Like a lot of entrepreneurs, they gravitated to something they knew. Lowe is a cocktail lover who savors gin-stoked potables such as martinis, gin and tonics, bee’s knees (which have honey and lemon) and aviations (with maraschino liqueur).

His favorite gin is a brand called Botanist, a more contemporary drink than the traditional British “London dry style” made by Bombay, Beefeater and Tanqueray.

Soon, the two latched onto the idea of starting their own distillery, which became a small-batch operation known as New Columbia Distillers.

After sinking more than
$1 million into the venture, mostly from Lowe, New Columbia is now churning out about 40 cases (of 12 bottles each) of Green Hat Gin per week, selling it to local stores such as Ace Beverage in Northwest D.C. and Schneider’s and to restaurants/bars such as the Passenger near the Walter E. Washington Convention Center, the Gin Joint in Woodley Park, the Gibson on U Street and Room 11 in Columbia Heights.

Before they got started, Lowe took a short course on craft distilling at Cornell University, taught by engineers working for a German stillmaker, to see if the idea was financially doable. It appeared so. Research told them that gin had a growing customer base with the advent of craft cocktails, especially for those in their 20s, 30s and 40s.

They spent dozens of hours online and at liquor stores, checking out bottle designs, poring over labels, looking for something to differentiate themselves.

They began experimenting in Lowe’s Chevy Chase kitchen about a year ago with various combinations of 40 different spices and berries. The base of the gin is a soft, red winter wheat from Virginia’s Northern Neck. Their “secret sauce” is the proportions of their “botanicals,” including coriander seed, fennel seed, celery seed, lemon peel, grapefruit peel, cinnamon, lemon grass, grains of paradise, angelica root, orris root and sage.

“We picked gin because we both like gin a lot,” said the soft-spoken, bookish-looking Lowe, who — except for a sleek, black Porsche — hardly seems the picture of an entrepreneur wading into the booze business.

“If someone told me five years ago that I would be an entrepreneur and own a distillery, I would say, ‘No chance,’ ” said Lowe, who ran a team of 20 litigators for Verizon.

It took the entrepreneurs about six months to locate a base of operations, a 90-year-old cinder-block warehouse in Northeast Washington near Gallaudet University. Uselton heard about it from a Washington restaurateur he once worked for and leased 3,600 square feet for 13 years at roughly $36,000 per year.

The pair recruited an attorney who was a friend of Lowe’s to help them get D.C. law changed so they could sell their bottles on premises at a retail cost of $36 per bottle. (Wholesale to restaurants and stores is $24.)

The big expense was construction. They had to upgrade steam, gas and water lines, install a sprinkler system and improve the electrical wiring. They knew from their Cornell class where and how to buy the distillery equipment.

The total cost was $650,000 for infrastructure and $400,000 for equipment.

Next, they got some hands-on experience in a week-long apprenticeship at a craft distiller in Spokane, Wash., from which they had purchased their equipment.

To price their product, they compared themselves to other craft-distilled gin in the U.S. market, including Catoctin Creek gin in Loudoun County.

It takes four weeks to turn their grain into gin. The first week, the grain is ground and cooked at 185 degrees. It is then cooled down. Yeast is added, and it ferments for a week. The result is distillers’ beer that is 12 percent alcohol.

The next week is spent doing four different distillations, boiling off the alcohol, which is collected in stainless steel tanks. In the fourth distillation, the alcohol is converted to Green Hat gin by the addition of their secret botanical recipe, which includes juniper berries, which gives gin its distinctive flavor.

After the second week, the 40 cases of gin rest for two weeks in a stainless steel tank. This allows the flavors to open up and create the liquor’s uniqueness.

Finally, the gin is chilled to near freezing and run through a micro filter to remove oils and minerals that might cause it to cloud.

Every Saturday, the company uses Twitter and other social media to recruit volunteers to help them bottle the stuff.

The reward is some free sipping.

Their sales started with stores, bars and restaurants where Uselton had worked or had patronized. Lowe and Uselton cold-called potential customers, showing up to offer bartenders and store owners a taste.

The District law that allowed them to give tastes and sell retail at the distillery drove new customers and helped spread the gin through word-of-mouth. As they exploited social media, they began a conversation that resulted in bars and liquor stores requesting the product.

The company is doing okay. Lowe gauged how much he could afford to invest in the company if everything collapsed. Then he loaned the business about $1 million to fund the start-up costs.

So far, no collapse. Revenue was $100,000 in its first quarter, which began last October. The firm has positive cash flow, but that does not include paying down Lowe’s loan, which doesn’t require payments for a while. Neither partner takes a salary, although there is one employee.

Lowe said the economics should stabilize at around 50 cases a week. But the path to real profitability requires doubling production — and the purchase of another still.

So far, they only sell in the District. Virginia requires state approval of their product, which they hope to receive in the spring. Montgomery County government owns the liquor stores in that county, so Green Hat will have to get approval from county regulators as well.

The beauty of the District, said Lowe, is that Green Hat can skip the wholesale step and sell directly to restaurants and stores. For now, Virginians and Marylanders must drive to the District to buy.

Next up is a spring/summer gin recipe that is due out in April. Five years down the road is a whiskey.

No decision has been made yet on the name.

For previous Value Added columns, go to washingtonpost.com/business.

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