Canadian bitters firm crosses border to U.S.
Oct 05, 2017 06:54AM
By Kitty Mayo - Business North - Wednesday, October 4, 2017
Overskilled and overstaffed. That’s how Justin Frape describes his current workforce at Frape & Sons, an up-and-coming boutique bitters producer based in Thunder Bay, Ont., and he’s thrilled about it.
That’s because he has planned all along to make a leap across the border to Minnesota, and he’s ramping up to do just that, except that bitters were just the starting point. Distilling beverages is his real dream.
“The skill set is the same, and the Minnesota jurisdiction for alcohol is very attractive,” Frape said. Starting with distilling craft bitters made sense in his hometown, because they are not regulated or taxed in the same way, making them profitable on a small scale while he built his company’s home base.
With a name like bitters you would think it a tough sell outside of the elite cocktail-sipping fancy-pants crowd. Nonetheless, Frape has managed to take a craft attitude into this endeavor that appeals to people who are only just learning about bitters.
Distilling their own alcohol bases by hand with molasses from Ontario sugar refineries, local fruit and local grains, bitters are typically used judicially in mixed drinks, like a Manhattan. Under Frape’s influence, bitters are being used as flavorings beyond cocktails to infused butters, sauces and marinades. Think of bitters flavored with jaleapeno, basil, rosemary, oregano, garlic or lime.
Marking their three-year anniversary earlier this year, F&S celebrated with a move to larger production facilities and the addition of a retail store in Thunder Bay.
Firm plans are in place to not only bring his brand into Minnesota, but to expand operations exponentially, something that Frape says is literally a mandate of the company’s investors.
Frape came to Grand Marais looking for a reprieve from taxes.
“But now I’ve really started falling in love with the place, and found that every area is rich in its own history,” Frape said. Establishing an alcohol distillery in Grand Marais will add four new product categories to the F&S line-up: whiskey, gin, bourbon and liqueurs.
Small distillers in Ontario have to pay 80 cents of tax on every dollar, whereas in Minnesota they are taxed at the rate of 14 cents per dollar. Not considered a beverage alcohol, bitters are exempt from excise taxes. Though they do contain around 40 percent alcohol, that alcohol is considered a preservative, and therefore a non-beverage.
Calling himself “a recovering public accountant,” Frape spent his previous career working in the corporate tax accounting world. In 2014, he turned his distilling hobby into a business, one that he feels will keep him interested for the rest of his life.
“Doing corporate tax work for the rest of my life seemed like a way to die. Distilling holds the possibility of endless experimental variation, and I will not run out of experiments to do in my lifetime,” Frape stated.
Calling the whiskey program in Minnesota “the long play,” Frape says this is where his two young boys, ages 6 and 4, come into the “and Sons.” moniker. Planning an alderwood-smoked single malt in tribute to the North Shore tradition of alderwood-smoked fish, the whiskey barrel-aged programs will be set for eight and 12 years.
Gin, barrel-aged bourbon and liqueurs will also be produced at the Grand Marais facility. In the mix with every spirit he produces is Frape’s enthusiasm for creating unique flavors.
“We want to impart a sense of place in all our products, to tell a story using botanicals and local fruits,” Frape said. Sometimes subtle, other times bold, but always with the word “play” in the process, F&S flavors range from high bush cranberry liqueur to rhubarb with orange bitters.
In the works is a land deal in Grand Marais, and Frape says it is looking hopeful they will acquire commercial property located on the corner of Highway 61 and the Gunflint Trail by next spring.
Already established as a “C” corporation in Minnesota, Frape admits that crossing the border has been more complicated than he anticipated. However, as a show of good faith he has already ordered the production still for the new facility to be delivered to Grand Marais next spring. Manufactured in a 100-year-old factory in Louisville, Kentucky, the still’s rectifying columns will stand 30 feet tall, requiring the structure to be built around it.
While test runs of the new F&S spirits are not likely before the fall of 2018, back in Thunder Bay their head distiller is already working out recipes to produce to scale at the new distillery.
Currently selling through distributors in Houston, New York City and southern Minnesota, F&S is gaining a presence in locations dotting the North Shore and in Duluth. In tier one of his American business plan, Frape is hoping to secure distribution to 600 liquor stores in Minnesota and Wisconsin.
The new facility plan calls for 10 people to work in the distillery, two in the retail store and 15 in the cocktail bar and restaurant. Split approximately into thirds, the 7,200-square-foot building will house production and storage, the retail store, and restaurant/bar on the first floor, and offices in the upper story.
To get operations up and running, key Canadian employees will work in Grand Marais under NAFTA professional visas as marketing, logistics, communication and food safety technologists.
The restaurant will showcase culinary and beverage creative efforts, with a complimentary menu of food and drink pairings, and what Frape terms “an avant garde cocktail program.” Working with seasonally available ingredients, interesting techniques will include playing with bitters as a finishing agent, such as finishing a lamb shoulder with coconut and rosemary bitters, glazed bar nuts with bitters in the glaze, and compound butters flavored with bitters.
Frape will be managing the new business by traveling with an E-2 investor visa, but permanent long distance commuting is not appealing to him, and he admits he is contemplating taking up residence south of the border.
He has no doubts that the time is right for F&S products to be well received in Minnesota.
“I find that the craft industry in Minnesota is more mature, and consumers there are five to 10 years ahead in their appreciation of spirits, cocktails and craft libations,” Frape said.