Hood River Distillers is returning to its roots of making fruit-based spirits with the purchase of Clear Creek Distillery.
When it was launched in 1934, the Hood River, Ore.,-based liquor company began distilling alcohol from apples and pears grown in nearby orchards.
That business eventually fell by the wayside but HRD but is now reviving it with Clear Creek’s portfolio of gourmet fruit brandies and other products.
“It’s basically going full circle back to what we used to do,” said Ron Dodge, president and CEO of HRD.
In the 1960s, increased market opportunities for fresh fruit diminished Hood River Distillers’ source of raw materials, so the company turned to importing and bottling liquor from other producers, he said.
In the ensuing decades, consolidation in the liquor industry again brought change for HRD, which Dodge calls “the smallest of the big liquor companies in the U.S.”
Faced with less purchasing power compared to larger competitors, the company began to rethink its strategy when Dodge took the helm in 1999.
“We were looking for ways to survive the next 80 years,” he said.
HRD contracted with producers in Canada to create a blended whiskey that it began selling under the Pendleton brand in 2004.
The new product, which is associated with the Pendleton Round-Up rodeo and a Western lifestyle, found a receptive audience on national scale.
This year, HRD expects to sell 170,000 cases of Pendleton whiskey, out of its total sales of 1 million cases.
“We found a niche everyone had ignored,” Dodge said.
The company now hopes to build on its success in the premium spirits market with the purchase of Clear Creek Distillery.
The deal was completed earlier this year for an undisclosed sum.
The niche distillery was started by Stephen McCarthy in 1985, in part to provide a sales outlet for fruit from his family’s orchard near Parkdale, Ore.
McCarthy was inspired by “eaux-de-vie” fruit brandies in Europe and wanted to develop a value-added product for Oregon fruit.
“There were some bad years when we didn’t get enough from the packing house to pay the pickers,” he said. “You can’t protect ag lands if you don’t have a market.”
Clear Creek Distillery’s spirits went on to win critical acclaim and last year the company reached $2 million in sales.
Upon turning 70 last year, McCarthy decided that he had to consider the distillery’s future beyond his own lifetime.
“I can’t pretend I’ll be able to do this forever,” he said.
Selling the company to HRD made sense given their mutual ties to Oregon’s Hood River Valley, said McCarthy.
The larger liquor company also has money to invest in boosting Clear Creek’s sales volume and improving operational efficiencies, he said.
For example, the distillery has long relied on a “goofy” hand bottling process that could be automated to reduce labor costs, McCarthy said.
“This is an ideal situation,” he said.
For his part, Dodge said he doesn’t plan to interfere with Clear Creek’s methods of craft distilling.
However, he is excited about absorbing the company’s team of distillers, who can create new products at Clear Creek’s facility in Portland or HRD’s headquarters in Hood River.
“We have a wonderful resource available to us that we didn’t have before,” Dodge said.
One idea floated by both Dodge and McCarthy is a high quality vodka distilled from fruit.
Brandies comprise a small segment of the overall spirits markets, while a vodka product has a larger potential for growth, Dodge said.
By extension, a successful vodka could greatly increase the company’s demand for fruit, he said.
The concept is still in its early stages and HRD would need to carefully develop a marketing angle that connects with the broadest possible demographic, Dodge said.
“You need to find something that resonates with the consumer,” he said.