Interview: Yellow Rose Distilling and Texas’ Budding Whiskey Industry

Texas whiskey is a surprisingly new thing. While one might think that brown spirits and Texas pair together naturally, it’s actually rather difficult to distill whiskey in the Lone Star State.

Take Yellow Rose Distilling. The first legal whiskey distillery in Houston, it’s only six years old. Named after the Yellow Rose of Texas — a traditional song of the state that dates back to General Sam Houston’s 1836 victory at the battle of San Jacinto — the business is representative of the Texas distilling industry that is just now blooming.

We recently caught up with Yellow Rose co-founder Ryan Baird (pictured atop, middle) for a chat about founding a craft distillery, the struggle of opening one in Texas, and what spirits come off his stills.

SW: What’s the background of Yellow Rose?

RB: We founded Yellow Rose in 2010. It takes years just to get all the permits and everything. we started working on our first product in 2012. Then the grand opening of our new 10,000-square-foot production facility was in 2014. We were selling in smaller volumes before that, and have really ramped up production now.

Yellow Rose Distilling - corn grinding

Corn goes into the grinder at Yellow Rose Distilling.

SW: I read that this distillery was founded by you and your neighbor.

RB. Yes, Troy Smith (atop, left) and I have been friends for a while. We lived next door to each other in northern Houston. My background is in semiconductors, engineering and marketing. I was traveling a lot overseas, and I got sick of that. At the same time, Troy worked with automotive dealerships and was tiring of that. So we said ‘What can we do together?’

We looked into different business in the alcohol industry. And we really liked to drink whiskey. But we had no idea how to produce it. So Troy began to take classes into the production side while I looked into how to run the business side, how to sell product.

Just as I was graduating from business school and we were getting our product out, we had another partner join, Randy Whitaker (top, right), who handles all the finance and accounting. His background is with a major waste company, raising money and doing deals.

SW: Why have distilleries become popular businesses for modern entrepreneurs?

RB: I think the spirits business is inherently a fun business. People really enjoy talking about what they drink. No customer ever says, ‘Shoot, I gotta buy whiskey today’. The customer is always happy to be drinking whiskey.

Craft whiskey was an area without as many competitors, at least when we started. There weren’t any craft-whiskey distilleries in Greater Houston, and not even that many in Texas. We didn’t face a lot of competition.

Most people who start craft distilleries think they have to begin with vodka, since they can sell it right off the still. We thought about that too. But too many people were already doing that. And nobody was doing whiskey in Houston. So we thought that we could be The Guy in Houston for whiskey. And in many ways we are. We’re still really the only guy doing anything big with whiskey in Houston.

SW: I’m always surprised by how few distilleries come out of Texas, especially whiskey.

RB: When we started there were only 15-18 distilleries in Texas. The last I looked there were 83. So we’ve come a long way.

With whiskey, I think on one hand it’s expensive to get into. I mean, we have millions in inventory laid down that we can’t sell for years.

On the other, Texas has a lot of big cities. And big cities mean bigger governments and tougher regulations. We have people come into our distillery all the time who say that they’re just stopping by to see how it’s done, because they’re going to open their own distillery. I had someone like that stop in just yesterday. And I always say, “Sure, but come back to me once you can manage to get all your permits.”

Also, Texas is in the Bible Belt. That’s a whole other socioeconomic fight that distilleries have to contend with. It’s a culture thing down here: should people be drinking alcohol? It’s the same thing with the big cities. They’re tough on drinking. We get it, they want to protect their citizens. So the laws can be really difficult to figure out for distilleries.

Yellow Rose Distilling - bottles-2

SW: Your line includes three whiskeys.

RB: We started with Outlaw Bourbon ($54.99 per 750-ml. bottle). It’s unique for being 100% corn. Bourbon by law only needs to be 51% corn. We’ve found that corn bourbon ages well in smaller casks. We began with three-gallon casks, moved up to five-gallon, and now age it in ten-gallon casks.

We didn’t want to make a Kentucky-style bourbon. There are enough of those on the market. So we made a Texas-style bourbon. It has the heat and the full flavor. It’s 92 proof. It’s our premium product. We’re putting more money into it now and aging it longer. Texas has had a warm winter, so there will be good batches coming out.

We made the rye ($37.99) because we’d been getting requests for one from Texas customers. Texas is a bit behind the mixology movement, so Rye has really blown up here just in the last three or so years. We age our rye in custom-made barrels that have extra staves so that there’s more wood on the whiskey.

Ryes are obviously spicy, and we’ve found that a lot of people equate spicy to alcohol in a negative way. That’s not true, of course, but it made us bring down the spice by using a younger rye. Younger ryes don’t have as much flavor, so we blend in an older rye to account for that.

We also made a Candian blend ($29.99). Crown Royal is the top-selling whiskey in Texas. So we looked to build a better version. Ours is a little sweeter. It has a higher bourbon content. We don’t use any GNS [Grain Neutral Spirits].

We’re still fighting with that just because it says ‘blended’ on the label does not mean it’s inferior. They understand that in Texas, but some markets do not. Still, it’s our number-one seller, about half of our business. It’s a Canadian whiskey built for the southern market.

Kyle Swartz is the associate editor of StateWays Magazine. Reach him at kswartz@epgmediallc.com

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