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Israel’s first distillery selling its first batch - 4 years ahead of time
By NIV ELIS
16/12/2013
Financially, the idea seems like a sure win given the global surge in demand for whiskey.
 


It will be four years until Milk & Honey, Israel's first distillery, puts the world's first commercial Israeli single malt whiskey on stands, but the company is already offering micro-investors access to its historic first batch.

The company is running an online crowd-funding campaign through Indeigogo, promising anyone who pitches in $79 a bottle of the first brew, expected to hit shelves in December, 2017.

"I think it's a good way to market ourselves and sell the product that we will produce, so it's a great project," co-founder and primary investor Gal Kalkshtein told The Jerusalem Post.

Despite already having over $1 million in investment, the founders are hoping to raise another $65,000 through crowd-funding, in part because it helps them get a bit of early revenue, but equally because it helps contributors get invested, so to speak, in the project.



Bolstered by a burgeoning group of Israeli beer microbrewers, Kalkshtein, a high-tech finance guru, joined forces with Amit Dror and Simon Fried in 2012 to get the vision of the first Israeli distillery off the ground.

Financially, the idea seemed like a sure win given the global surge in demand for whiskey.

“From the macroeconomic perspective in the recent years China and India have recently developed a taste for alcohol, so there’s a global market,” said Dror.

According to a report by Euromonitor, between 2006-2011, India accounted for an astonishing 48% of global whiskey sales by volume, while China's spirits imports have grown 250% in the last decade.

The booming global demand has been accompanied by a proliferation of boutique distilleries; in the United States, the number of new entrants to the craft distilleries market is doubling every three years, according to Coppersea Distilling.

“You have this wave of small distilleries, but you have this surge of demand from the far East and the Scots are running out of  Whiskey,” said Fried.

Indeed, global whiskey manufacturers have been scrambling to keep up with the increased taste for liquor around the world.



In 2012, the world’s largest spirits producer, Diageo, announced a $1.5 billion expansion in its Scotch whiskey production over five years. Emerging markets, the company said, accounted for 40% of its sales, and it projected that share to grow to half.

Jack Daniels, an American company, recently announced its largest-ever expansion, with a $100 million growth plan.

Major liquor companies have also been trying to get into the craft whiskey market by scooping up small distillers and offering a variety of boutique-style offshoots, such as Gentleman Jack and Jim Beam’s 90-proof Devil’s Cut.

The explosion in distillers, however, complicated the task of starting a new distillery because high-quality equipment and distilling experts proved difficult to find. A combination of luck and the allure of creating whiskey in the holy land helped all the pieces fall into place for Milk & Honey.

Master Distiller Jim Swan signed up for the challenge of crafting the first Israeli whiskey in hopes of experimenting with the warm climate and the possibility of aging some of the first whiskey at the Dead Sea--perhaps the first whiskey to be aged below sea level.

“I was so relieved when he liked the idea. He told me ‘As a Scot, this hurts me to say, but if I were asked to found a distillery I would do it in a warm country,” because it speeds up the aging process,” said Fried.

Because the temperature fluctuations push whiskey in and out of the wood in the barrels that age it, three years of aging in Israel could produce similar effects to ten years of aging in Scotland, he said. Swan recently proved this with his work on Taiwan’s new whiskey Kavalan, which managed to beat out a slew of older Scotch whiskeys in a blind taste test.

In a stroke of luck, the group happened upon a rare second-hand still needed for the first part of the whiskey-making process in a German warehouse. It turned out to be in perfect condition and up to the most stringent of Scottish standards helping them jump-start their plans. The second still needed in the process was made to their specifications by German company Carl, which had a nearly two-year backlog.

With almost all of the piece now in place, the distillery hopes to start brewing up its first batch of spirits in the first quarter of 2014.

For those who cannot wait until 2017 to taste the first whiskey, there is good news; as they embark on the distillation process, the company intends to put out other liquors, such as non-aged white whiskey (a more glamorous term for legal moonshine; “it’s like vodka with flavor,” said Fried.)

Another more alluring possibility: Israel’s first gin. While Milk and Honey is aiming to avoid a specific niche for its first single malt whiskey (“not peaty, not too light, a little fruity, no extremes”), gin opens up the possibilities of incorporating a more distinctively Israeli “terroir,” using local plants and herbs to give the spirit its unique flavor.

That could take the edge off both whiskey lovers and investors waiting for a return. But as Kalkshtein put it, eventual profits are only a small part of his motivation for pouring money into the new venture. The true drivers, he said, are “reasons of whiskey and Zionism.”
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