Riding the Boom, Contract Distillers Are Selling More than Whiskey

Meeting the demand for bourbon brands whose owners want others to manage production, contract distillers are offering state-of-the-art facilities, high levels of customization, and a wide range of support in getting to market.

Hollie Stephens Jul 11, 2024 - 10 min read

Riding the Boom, Contract Distillers Are Selling More than Whiskey Primary Image

Artist rendering of Eastern Light’s planned $143.7 million distillery. Image: Courtesy Eastern Light.

When Kentucky Peerless promoted Caleb Kilburn in 2018—he was 27 at the time—he became the state’s youngest master distiller. He left Peerless in 2023 to pursue a new project, but not before the Icons of Whisky Awards named him Master Distiller of the Year.

His career is still young, but today he’s more focused on helping others achieve success. As cofounder and master distiller at Eastern Light in Morehead, Kentucky—where, on July 2, they broke ground for their $143.7 million destination distillery—he says he’s passionate about helping the people behind whiskey brands realize their ambitions. Sometimes that means taking a central role; other times, it means taking a back seat.

“We saw so many amazing craft concepts that would fail to reach their potential due to lack of access to really good whiskey, proper distribution, creative channels,” Kilburn says. This was the inspiration for the company, and so far, the team has been providing professional advisory services and lining up clientele. “We’re willing to customize as much of the process as they want—to help them actually have a stake in the ownership of creating their spirit. We want them to feel like they’re taking ownership of the products that we help them make.”

The bourbon boom has been good to contract distilling, but whiskey’s wider popularity has also shifted the nature of the business from its earlier days. Those looking for sourced whiskey or contract distilling include new brands with limited facilities as well as existing brands looking to expand. Meanwhile, the companies providing this service are helping to democratize the whiskey landscape, making it more accessible for newcomers.


And today, the options available to those looking to outsource their production are more customizable than ever.

Bespoke Whiskey

At Eastern Light, Kilburn says that focusing on each detail—from the mash bill to the barrel char and toast—is what allows their clients to differentiate themselves from one another. “If we came out and we said, ‘Here’s five mash bills, pick from one of them,’ there’d be a lot of overlap in the profile and the way that those customers would have to take their product to market.”

Location also matters. “We have one of the cleanest raw water sources in the state, just miles away from the distillery,” he says, adding that this helps to minimize any necessary water treatment.

Location is also in the sales pitch at Whiskey House, a freshly opened contract distillery in Elizabethtown, Kentucky. (A July 1 news release announced the start of production at the “industry-transforming distillery.”) The 176-acre campus is in the Interstate 65 corridor and includes a rail link—a setup ideal for shipping bulk liquid to national and international markets.

Courtesy Whiskey House of Kentucky

Cofounder and CEO David Mandell calls it the country’s most advanced distillery, with 112,000-barrel capacity. He notes the careful design of the rickhouses—“They’re longer and skinnier,” he says—aimed at ensuring good airflow and maturation in all positions.


From the start, they designed the Whiskey House facility with detailed customization in mind. “Just about basically every aspect of production can be modified or adjusted for our customer’s needs,” Mandell says. Meanwhile they’re collecting data throughout the process. “We have thousands of sensors across the system capturing all of the information on what’s taking place in the fermentors, what’s happening in the still.”

For example, barrels have barcodes that, when scanned, confirm the origin of the wood, down to which part of which forest and when it was harvested. That level of detail, Mandell says, can help their customers tell a richer story about product origin, down to a singular barrel. “Consumers really care about that,” he says.

Customization is a big part of what today’s contract distillers are selling: empowerment, so that customers can have an important say in the final spirit. They maintain that approach at Bardstown Bourbon (which Mandell and team also helped to launch in 2014).

“There are roughly 500 points of production that can be customized,” says Andrew Newton, Bardstown’s senior manager of contract sales. “When the customer settles on a flavor profile, we talk about how it can be tweaked specifically for them: from sourcing specific grains, yeasts, customizing mash-cooking procedures and distillation parameters to barrel-entry proof, barrel char/toast, specialty barrels, and secondary finishing.”

Beyond distilling, bottling represents another way to customize the product to meet widely varying needs. “Bottling and packaging is a very complex, tedious area,” Newton says. “Some of our customers are bottling 500 six-packs per year, with upwards of 250,000-plus cases for our larger customers.” Newton says the Bardstown team listens to a customer’s vision about their packaging, and then they work with them on a comprehensive evaluation. That can involve helping them to think about packaging scalability as their brands grow or about fine-tuning ideas to keep their costs down.


One master distiller working with Bardstown is Marianne Eaves of Forbidden Bourbon. “Eaves and her partners had a specific desire to use white winter wheat in their custom mash bill, with many custom parameters,” Newton says. “We were able to create something incredibly special by taking their ideas around mashing and grain selection and bringing them to life.” Next, the bottling team worked closely with Eaves to ensure that the custom packaging ran smoothly on their bottling lines, and that they could scale it up seamlessly as needed.

Discretion, Distribution, and Details

The reasons that a client chooses contract distilling might impact how they talk about it—or how they don’t.

Established distillers with small facilities might need more capacity but be reluctant to expand. “In those cases, they may not want to be quite as public with their affiliation with us,” Eastern Light’s Kilburn says. Eastern Light is happy to work either way, he says—with a loud, overt partnership, or as quiet support.

California’s New Alchemy balances contract distilling with its own brand, which owner and distiller Matt Sweeney says can be challenging. “We are a relatively small facility, so capacity is always an issue, but we are mindful about scheduling and generally realistic about production timelines,” he says. “Learning your own limitations and knowing when a project is better suited to another contract manufacturer is important.”

The timeline for recipe development with clients can vary wildly, Sweeney says.


“Typically, we run an R&D project with new clients that is done in rounds of samples, with us formulating some samples and the clients tasting them, and with adjustments being made between rounds,” he says.

For a product type with which the team has lots of experience—such as gin, whiskey, or some simple canned cocktails—it can be fairly fast. For more novel or complicated products, it can take months—more than a year, in some cases. “Overall, we want to make sure whatever formula/process we come up with works outside of the lab,” Sweeney says.

Navigating a tricky regulatory landscape can be a challenge when bringing a new brand to market. New Alchemy offers some support or assistance in this early-stage business planning for their customers, helping them to navigate regulatory, procurement, and packing issues, including label approval and federal and local compliance. “We also work with clients on export, outside distribution, and retail-system onboarding with larger corporate retailers,” Sweeney says.

For brands that opt to hire contract distillers, it’s important to follow the correct practices, and companies that specialize in compliance and logistics can help. “The person purchasing the liquid from the contract distiller still needs proper paperwork and authorization letters that document continuity of ownership,” says Cheryl Tittle, director of compliance at MHW, a company that provides various types of support to beverage-alcohol companies. “What’s more, if the contractor plans to ship from the distiller, they will need to secure the necessary state shipping licenses for the distiller’s shipment origination location, if required.”

Brand Incubators

Making a great product is only part of the path to success in today’s increasingly crowded spirits market. Contract distillers also often support clients with marketing, branding, navigating label compliance, and more.

Eastern Light CEO Cordell Lawrence says it can take a lot of lawyers and minds coming together to work out what a brand can and can’t do to tell their story. “A lot of times, that’s very surprising for people to hear.”

Given how many products are out there today, distributors might see a new, small brand as a liability until they see proof of success in the market. “We can help nurture and incubate them,” Lawrence says, emphasizing issues that distributors care about, “so that they are in a good light.”

It’s an approach that allows clients to benefit from the team’s expertise. “These people are highly intelligent [and] successful in other industries,” Lawrence says, “but a lot of times they’re misguided in terms of how they apply that intelligence to our industry. Oftentimes it’s very unconventional and a bit mysterious until people really get into [understanding] which levers to pull and which gears to turn.”

Hollie Stephens is an award-winning journalist based in New Mexico and originally from the United Kingdom. Her work has been published in Craft Beer & Brewing Magazine®, Brewer and Distiller International Magazine, Wine Enthusiast, and many other publications.