By Glen Martin | Jun 15, 2021
Premium artisanal spirits
It's a common narrative in California's wine country: professional young couple tires of the urban rat race and repairs to the hinterlands of Sonoma or Napa County to establish a vineyard or launch a premium winery. And it's a storyline that the couple generally followed -- except they didn't plant vines or open a winery.
"Josh and I met in San Francisco where he worked for the federal reserve and I was a graphic designer," says Sarah. "He had grown up near Healdsburg in Sonoma County -- his dad was a viticulturalist -- and we used to go up a lot to visit his family. Both of us really loved the culture and lifestyle."
They loved it so much, in fact, that they decided to chuck their city jobs, move to Sonoma County, and go into business.
"We really enjoy wine, but the wine market is completely saturated," Sarah says. "For an entry effort, it didn't seem like a good choice. Plus, we love both beer and spirits. There's much more innovation and excitement going on in those sectors right now compared to wine."
More to the point, she adds, she and her husband dote on premium distilled spirits -- libations that aren't well represented in wine country. So instead of opening another winery in Sonoma County -- the vinous equivalent of taking coals to Newcastle -- they decided to launch a distillery.
“We had played around with small distillations and brewing beer, so we decided to really dig into it and see what it takes," says Sarah. "Starting a winery requires a really big capital investment. To a very real degree, your chances of success are largely determined by how much money you can put up. We figured spirts provided a much better opportunity for us."
The couple immersed themselves in both the arcana of distillation and the formidable paperwork required to get a distillery up and running.
"We finally got a license in 2013 and found a production site in Cloverdale north of Healdsburg that worked for us," Sarah says. "We were still living and working in San Francisco, but we'd get in the car every Friday and drive north, then spend every waking moment during the weekend experimenting with different distillations and infusions. It was pretty hectic."
They also brainstormed on a good name for their enterprise, finally hitting on the alliterative Young & Yonder.
"A lot of people initially think it refers to the names of the founders, which isn't the case, of course," says Sarah. "Aside from the fact that it's catchy and people remember it, we chose it because we're 'young' and we moved out 'yonder.'"
The company shifted to a new venue in Healdsburg in 2017, a decision driven by the town's reputation as a Sonoma County analogue to the Napa Valley's St. Helena or Yountville.
"We knew it would give us needed visibility and provide at least some opportunity for direct-to-consumer sales," says Sarah.
Given the new location, it might seem logical that Young & Yonder Spirits would focus on brandies -- which are, after all, distilled from wine.
"We do some custom brandies, but we're really known for our grain-derived spirits," says Sarah. "For one thing, they're more versatile than brandies. We also really enjoy producing them. And again, they set us apart in the marketplace."
Josh applied himself diligently to the distillation learning curve.
"Then he taught me, and now we distill together," Sarah says.
Young & Yonder Spirits produces a wide range of classic and flavored vodkas, gin, amaro (an herb-infused spirit similar to Campari), single-malt rye, bourbon, and corn whiskey, as well as absinthe, the classic spirit of 19th century Europe that has a raffish, even wicked reputation because it contains wormwood, an herb with narcotic properties that can be toxic in high doses.
"It's not an issue with us, however," says Sarah. "We have to submit samples of our absinthe for testing to ensure safety."
Though Young & Yonder's unflavored classic vodka is a big favorite due to its versatility, the company is particularly renowned for its flavored vodkas, gin, and amaro, all of which involve infusion with various botanical ingredients.
"Our use of botanicals is central to our reputation," Sarah says. "We use 12 different botanicals for our absinthe, 16 for our amaro, and eight for our gin. We're known for the unique styles of each of our spirits. Our gin, for example, has a classic juniper backbone with a modern twist that comes from dry lemon peel, hibiscus, lavender, coriander, cardamom, angelica, and bay leaves. Our lime-infused vodka employs whole limes in the production process, and it was an unexpected huge hit. People went nuts when we first poured it, and it always sells out quickly."
The distillation process is relatively straightforward: a mash is made from grains, yeast is added, and fermentation occurs. The mash is then distilled, stripping away the alcohol.
"The tricky part is making 'cuts,'" says Sarah. "You don't really want the first part of the distillation or the last part. The cleanest and purest alcohol is in the middle of the distillation, and you have to determine where to take your cuts depending on what you're making."
Further, multiple distillations may be required, after which the alcohol is filtered and 'proofed,' or diluted with distilled water to the desired strength. Whiskeys and ryes typically go into oak cooperage for aging. Vodkas and gins can usually be consumed soon after distillation, proofing, and filtration.
"For our flavored spirits, we typically combine the botanicals with neutral grain spirits and run it through the still again," Sarah says. "There are different ways to incorporate different botanicals in different spirits, and the judgment and experience of the distillers play a huge role. Distillation is both science and art -- that's why we find it so exciting."
Distilled spirit license documentation is voluminous and complicated, and Young & Yonder's license proscribes the company from self-distribution; they can only sell to distributors or directly to customers from their tasting room near Healdsburg's central plaza.
"We didn't really expect it, but our tasting room has been our salvation," says Sarah. "Almost half of our sales occur there, and it allows us to build a loyal and enthusiastic customer base. Healdsburg is a national destination for people who love good wine and food, but a lot of them also appreciate a good cocktail. They're always happy to find us."
Challenges: "There are three main challenges we think about," Josh observes. "The first is market expansion in a regulated distribution system. As more and more craft brands enter the market, distributor books have become saturated, and they've limited taking on new product. The second challenge is the number of market participants and how we position our company to succeed in a crowded space. The number of craft distilleries has skyrocketed in the last 10 years. With more and more product entering the marketplace, opportunities for new distributor relationships have become harder to get. Third, expansion is a challenge because alcohol production is regulated by local, state, and federal laws. Expanding production space requires new licenses and permits that can take several months, in addition to building code requirements for processing flammable materials, which is extensive."
Opportunities: "We believe there's an inherent opportunity to expand sales within existing markets by developing new products, and we continue to research new craft spirits that will add revenue diversity to our business," says Josh. "We also think about markets from a geographical perspective. We are a domestic regional company today, so we see expansion into other states within the U.S. as an opportunity."
Needs: "Currently, our biggest constraint is capitalization," says Josh. "Normally, distilled spirits plants operate on a negative cash flow basis. That can be challenging in and of itself with raw materials and overhead, but aged spirits constrain cash flow even more because value creation doesn't happen until the product matures, gets bottled, and is sold. [Limited capital] also applies 'gravity' to the size and scope of an operation and can constrain total cases produced, which in turn can limit market opportunities."