A  whole new category of restaurant is springing up around the country, a hybrid of bar and distillery. Similar in concept to brewpubs, these newfangled establishments produce the spirits in-house that they mix into cocktails behind the bar.

The draw for customers is, say, sipping a Negroni while watching the newly distilled gin trickling from the condenser. For operators, the gleaming copper still is an entertaining focal point of the restaurant as well as a unique point of differentiation. Hand-crafting spirits on-premise attracts cocktail geeks as well as curious customers.

These so-called stillpubs are a natural development of the rapid growth of micro-distilleries across the country. There are well over 240 facilities licensed by the Federal Alcohol and Tobacco Tax and Trade Bureau, up from a mere 69 in 2003, according to the American Distilling Institute, which predicts that number to grow as high as 450 by 2015. The restaurant/distillery hybrid is “a developing phenomenon within,” says Pennfield Jensen, vice president of operations for the institute. “Obviously not all states allow this,” he adds.

Indeed, operators wanting to set up a distillery face hurdles. Getting approval and licenses from the feds, state and local boards can take years—and sometimes requires lobbying for new legislation. The science and art of distilling is complex. Copper pot stills are expensive. And you can’t just pipe liquor from the still to the bar; complex tax regulations require the still area to be bonded. Some states require the stillpubs to sell their product to the state and then buy it back. Also, in most localities these establishments can only sell spirits by the drink; bottle sales are through off-premise retail shops.


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