While many large spirits companies are busy playing catch-up, trying to wow consumers with the latest in upscale, super-premium boutique vodkas, the small but mighty Distilled Resources, Inc. (DRinc), located in Ketchum Falls, Idaho, has been quietly making a name for itself as a contract producer of premium quality neutral spirits, most notably using nature’s prized assets: clean mountain air, clear water from 200-ft. Snake River wells and Idaho russet potatoes. Yes, potatoes. Specifically, 9.5 pounds of them per 750mL bottle of 80-proof potato vodka.
But wait, doesn’t most vodka come from potatoes?

“When we give tours, I always ask people that, and nine out of 10 people think that,” says DRinc director Gray Ottley. While he says Poland is known for producing potato vodka, 99 percent of the vodka made in this country comes from grain. But DRinc further distinguishes itself as the only beverage-grade potato alcohol distillery in North America, as well as certified organic grain alcohol and organic vodka producer, including Square One, 100-percent certified organic rye vodka and its oldest product, Teton Glacier, in production since 1996.

Although currently a contract distiller, creating 190-proof, neutral spirits used in vodka and liqueurs, Distilled Resources didn’t start out that way. Ottley’s father Philip and business partners Jack Kennedy and Deke Wells formed Silver Creek Distillery in 1988 when they bought an old ethanol distillery owned by the government in the late 1970s, designed to turn Idaho potatoes into fuel for farmer’s tractors, says Ottley. They decided to use the bounty of their given environment—potatoes, clean air and water—to create vodka from potatoes, and Silver Creek vodka debuted in 1992. “Very quickly into it we realized we really didn’t know anything about this industry. It is a labyrinth of intimate relationships, of laws and regulations. There isn’t one market, either—there are 50 and they’re all different,” says Ottley. In 1996, he was brought in to help reorganize and reposition the company to do what it does best: create high-quality neutral spirits on a contract basis and leave the branding and marketing to someone else. Thus, Silver Creek vodka, which he describes as “a Ferrari engine in a Pinto body,” was discontinued, but the formulation turned into Teton Glacier, its first contract spirit. Marketed by World Wide Wine and Spirits in Norwood, New Jersey, it was awarded a gold medal (93 points) from Beverage Testing Institute in 2001.

Known as Distilled Resources since August 2005, the company is reaping the rewards of a booming beverage category, as vodka accounts for 27 percent of all spirit sales and 25 percent of 153 new distilled spirits introduced last year were vodkas, according to Adams Beverage Group. In the early days, though, Ottley says a year and a half went by between its first and second customers. “Now we get a call about once a day,” he says. Not only has its consumer base become savvier, thanks to the success of boutique imports, but also the Internet has made the company more accessible to entrepreneurs.

So why the buzz? With clear water, unusual but expensive raw materials (potatoes do not yield nearly as much as grain), and a specialized technique that eschews pot stills for a four-column, continuous process that distills only once, the company has developed a reputation as the go-to guys for high-quality spirits and innovative products. “We’re not interested in making straight vodkas, and don’t want to sell two of the same thing in different bottles. It’s misleading for the consumer and I think it cuts the legs off our clients,” he says.

Consequently, its product line reflects an array of niche brands, such as the in-your-face red liquor Hideous, a successful venture Ottley describes as “pretty yummy stuff.” DRinc has worked as a contract distiller to create a handful of vodkas, including 3 Vodka (made from soy), Orange V (orange), Zodiac (a different bottle for each of the 12 signs), the organic, multigrain Liquid Ice, 44 Degrees North (with huckleberry juice), the fruity, caffeinated Zygo (with yerba mate and guarana) and the recently launched Hendrix Electric, whose marketing matches the vibrancy of the guitarist’s music and clothing.

Distilling the essence of someone as iconic as Jimi Hendrix into an alcohol beverage is admittedly a curious proposition. “We’re always trying to do the best we can. We’re learning that with the same knowledge and same equipment, which is excellent, using different raw materials really does produce different flavors,” Ottley says. Hendrix vodka is made from corn and rye, and Ottley says grain vodka is more smooth than sweet, whereas the potato, for example, imparts a smooth and sweet flavor.

Earlier this year, select markets received ShotPak, a 50-mL shot of flavored vodka packaged individually and sold in a colorful plastic pouch. “It definitely is a departure from the type of product we make, but we took that on because of its packaging design,” says Ottley. Noteworthy products on the horizon include Herb’s Aromatic Garden Variety vodka, infused with herbs such as rosemary, fennel, dill and cilantro. It’s available in Las Vegas and New York and seems destined not only for martinis and other mixed drinks, but cooking as well, according to Jerome Hyafil, CEO of Garden Variety. It launches Ecstasy, a pomegranate liqueur, this month.

With fancy vodkas flooding the marketplace, and information on its Web site detailing what good vodka should taste like and how one ought to enjoy it, DRinc is fostering an awareness that suggests that one can—and should—drink vodka as one would a favorite Irish whiskey or Kentucky bourbon. The cost is certainly comparable, but in its promotional materials and in conversation with Ottley, Distilled Resources resists the market label of a premium, super-premium or ultra-super-premium beverage maker, joking on its Web site that “these terms may sound like grades of gasoline.” Although its products easily command $30 and up, and Ottley himself admits “we’re in the high end,” he offers an explanation: “That’s a game you’re never going to win. If I told you it was the super-duper ultra triple stampies, no-erasies best premium vodka, all someone would have to do is say it’s quadruple stampies-no erasies, and all of a sudden it’s better than ours. The same thing goes for the number of times distilled. Recently a 12-times distilled vodka came out. How long will it be until the 13-times distilled comes out? We say we did it once; we got it right the first time.”

When asked about the future, Ottley admits he doesn’t know. “If you had told me five years ago that we’d be making an organic vodka, or a red liquor called Hideous, I wouldn’t have believed you. I’ve learned not to play judge and jury.”

Lately, DRinc has started to shed its low profile, attending its first industry convention this year. “I think we do have a brand; it’s what goes into these products. We’re the ‘Intel inside’ in the spirits industry,” he says.

VITAL STATS
distilled resources, inc.
DIRECTOR: Gray Ottley
SALES ’05: $7 million
HEADQUARTERS: Ketchum Falls, ID
EMPLOYEES: 22
GOALS: To be known as the source that put a potato or organic grain in each US premium spirit.