With craft distilling on the rise, some are cashing in without even making their own product.

By Pat Evans and Jesse O’Brien for the Grand Rapids Business Journal

The story behind a bottle of spirits sitting on the shelf might be murkier than its contents.

Look closely at that bottle and the label can be confusing — and misleading.

There are a variety of descriptions that can be slapped on a label, including, “Distilled in,” “Bottled In,” “Manufactured In,” “Produced In,” “Aged In” and any combination of those.

Just because a label reads “Bottled in Michigan” does not mean the spirits were made in Michigan, said Kent Rabish, owner of Grand Traverse Distillery in Traverse City. If it reads anything other than “distilled,” at least in whiskey, it wasn’t made by the company.

Rabish said the distilling industry is mostly split in two camps, with producers and merchant producers.

Producers, like Grand Traverse Distillery and Long Road Distillers, are involved with nearly the entire process of distilling, from grain to bottle. Merchant producers purchase their spirits from a larger distillery, often in bulk quantities and sell it under their own label.

This shouldn’t be a problem, Rabish said, unless the “craft” distiller is intentionally deceiving the consumer. In some cases, he said, distillers are buying their spirits from industrial factories that churn out whiskey, and then sell it under a “craft” label.

“I think that’s kind of the tragedy of non-distillers,” Rabish said. “They’re clogging the shelves. It looks like craft, like they bring raw grain in, like they have product they’re making. (Craft) costs more, but it’s a better product.

“I try to point out to people, why do most vodkas taste alike? Because most are made by the same handful of companies.”

Rabish anticipates that soon enough, consumers will begin to notice the difference in taste, and the divide between distillers and merchant producers will become clearer.

“It’s getting out there and I do think the customers of craft spirits will start hearing rumblings and start hearing more and more about who’s making it and who are the merchant distillers,” Rabish said. “There’s no reason you can’t set up a company and be a merchant distiller, you’ve just got to be straightforward with what you’re doing.

“And I think over time it’s going to pan out. I think long term, the ones who are going to succeed in this industry are the ones who are honest about their product.”

There is some gray area as producers are often limited by the type of still they have and might only be able to produce a whiskey or vodka or gin, and would like to package and sell the others, said Jon O’Connor, co-owner of Long Road.

“There are layers. There are legit distillers making all their own whiskies but they buy vodka,” O’Connor said. “At least they’re trying to make some stuff — that’s good.”

Still, many distilleries opening up across the country perform zero distillations because the rebranding of already distilled spirits makes financial sense as starting a distillery is a capital-intensive business.

A distiller hoping to enter the market and create an authent