Dry Fly Distilling to expand mixed

Mar 26, 2024

Dry Fly Distilling Inc., of Spokane, is launching a new line of mixed drinks with the goal of increasing revenue and expanding its product lines that can be purchased at more establishments, says Patrick Donovan, vice president of production and co-owner of the downtown distillery.

The new line, dubbed “The Guided Sip Series,” will have 13% alcohol by volume and primarily will be sold in Idaho where the threshold for a beer and wine establishment is 14% alcohol, says Donovan. By contrast, in Washington, the company’s best-selling canned drink is a huckleberry lemonade with 4.9% alcohol.

“This project is massive,” says Donovan. “Any establishment that has a beer-and-wine license can sell them, and they’re not taxed egregiously.”

The series will include a huckleberry lemon drop, followed by a bloody mary cocktail, and an earl grey old fashioned.

Dry Fly has local partnerships with Spokane-based businesses for a variety of ingredients such as Revival Tea Co. and Spiceology Inc., says Donovan.

“Making an old fashioned is cool but if you can do a spin on it and you can work with a local company, that is better,” he says.

Other spirits the distillery is getting ready to produce include bourbon, and Agave Spirit, which has that name instead of tequila because any liquor named tequila must come from one of five authorized states in Mexico, says Donovan.

The distillery produces 100,000 gallons of alcohol a year and has a projected annual revenue between $4 million and $5 million, similar to 2022 revenue and up from $3 million in 2021.

About half of the distillery’s annual revenue comes from mixed cocktail can sales, which Dry Fly began producing in early 2019, he says.

Whiskey is where Dry Fly can make more revenue, says Donovan. However, unlike vodka and gin, which take about a week to produce, whiskey must age in a barrel for a minimum of five years. With the onset of the pandemic in 2020, Dry Fly focused on making hand sanitizer and less on producing whiskey, says Donovan. While the company still has some reserves, it’s going to be a few more years until its latest batch will be ready, he says.

“Production didn’t really get going until late 2021,” says Donovan. “It’s been a whirlwind. We did the cans, then COVID, and then the new facility.”

Dry Fly was established in 2007 by Don Poffenroth and Kent Fleischmann, each with decades of experience in marketing in the food industry. Fleischmann is no longer with the company. Poffenroth is president and CEO.

The distillery has 24 employees, including a management group, production workers, restaurant employees, and support staff. The company ships to 40 U.S. states but stopped international exports during the height of the pandemic due to high tariffs and other hurdles, says Donovan.

In July of 2021, Dry Fly moved to 1021 W. Riverside, where it occupies a 19,000-square-foot portion of the former press building for The Spokesman-Review newspaper.

“This part of the building (was) the color print production, where the Sunday comics and ad circulation were done,” Poffenroth says.

Ginno Construction Co., of Coeur d’Alene, was the contractor on Dry Fly’s $4 million remodel, and Paul Herrington of Spokane-based ROMR Architects designed the new facility which includes a restaurant, production space, event space, and gift shop, says Poffenroth.

Donovan says, “This building’s really a unicorn for being downtown. Usually when you get into the heart of any downtown you don’t see major manufacturing, because it doesn’t make sense—the cost per square foot and all that.”

The company’s previous location at 1003 E. Trent was about 4,200 square feet and included a production facility, tasting room, and storage, says Donovan.

Poffenroth, a born-and-raised Spokanite and Whitworth University alum, says he wanted to create something in Spokane without the pressure of having to move to California for his career. He embarked on his second career producing craft spirits when he was 44 years old.

“We thought we’d be OK, but it has grown probably beyond rational explanation,” says Poffenroth.

At the time, there were less than 30 craft distilleries in the country, and today there are over 2,500, says Donovan, who has been with the company since its founding.

As craft distillery began to gain traction, Dry Fly began to receive inquiries for its business plan, he says.

Donovan and the management team didn’t give away their business plan, but instead began to offer craft distillery classes, a program they offered for 10 years until about 2018, he says.

“We wanted to set the tone in craft distilling,” he says. “I don’t want someone to try a craft whiskey or a craft vodka that tastes terrible and say they’re never going to do a small brand again. It helps if we all do a good job.”

As a result, Dry Fly has trained a lot of people who are now in business and have done well, says Donovan.

It can often happen that a business will purchase a spirit from a large factory and rebrand it as a local craft product, he says. Dry Fly wanted to teach others how to take locally sourced raw material and move it through the process as a true craft distillery, he says.

“It’s a tough industry though,” says Donovan. “There’s been a lot of failure. I’m really proud of us for having sustained going on 16 years.”

Dry Fly sources its grain and wheat from farms within a 30-mile radius of Spokane, he says. Botanicals for the company’s gin are also sourced locally and contain a Northwest style such as apple, coriander, mint, lavender, and hops, in addition to the spirit’s traditional juniper berry infusion, says Donovan.

While Dry Fly has stopped offering classes for would-be distillers, the company offers classes in which guests can make their own gin or whiskey, he says.

Production of the distillery’s spirits can be viewed from the restaurant’s dining room windows.

Led by chef Avont Grant, Dry Fly’s menu infuses its spirits and other elements of the distillery into its items, he says.

One example is the Randall Burger. Donovan says the distillery’s spent grain is sent to a farmer in Medical Lake who feeds the grain to his cattle. Recently, Dry Fly began buying the Dry Fly grain beef to create a house burger.

Donovan is 39 years old and a graduate of Gonzaga University. Before joining Dry Fly at age 23, he had done some home brewing, but most of his training came on the job, he says.

“We made a lot of mistakes, but we also learned a lot,” he says. “We take a simple approach, and our area grows the best wheat in the world, so we use a really solid material.”