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Developer says grant-funded Clayton business jeopardizes distillery plans

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Plans for another distillery in the Alexandria Bay area are now in motion, but developer Roger R. Reifensnyder of Hammond said the business might never get off the ground to compete with Clayton Distilling Co., which received a $99,000 Rural Business Enterprise Grant from the U.S. Department of Agriculture to purchase equipment.

Mr. Reifensnyder incorporated his business, Dark Island Spirits Inc., this month and is seeking a location for his distillery in Alexandria Bay. But after learning about the grant awarded to Clayton Distilling — to be built on Route 12 outside the village of Clayton — he said he might not be able to compete financially.

Mr. Reifensnyder contended the grant secured by that distillery will allow it to sell products at lower prices than those his own company could afford to offer. The Clayton distillery is now positioned to outcompete any similar companies that want to set up shop in the north country, said Mr. Reifensnyder, who owns 85 acres of farmland that could be used to grow grain for his operation. He has been planning his distillery for the past three years.

Mr. Reifensnyder’s lawyer, Timothy M. McClusky, sent a letter May 21 expressing his concerns to the Jefferson County Job Development Corp.

“This could still happen, but I think it’s a lot less likely now,” Mr. Reifensnyder said. “I think (the Clayton distillery) should pay a fair market value for the equipment they obtain so that we aren’t at a competitive disadvantage.”

With the USDA grant, the Jefferson County Industrial Development Agency will purchase a copper still system and stainless steel vodka column on behalf of the distillery, which will be installed this fall. That sum will be paid back without any interest in five to seven years by the distillery, which is purchasing an additional $312,000 worth of equipment on its own.

Mr. Reifensnyder, a consultant for Venus Swimwear in Dexter, said the capital outlay required to start a distillery would compel him to sell products at higher prices than the Clayton distillery.

“Our price point is going to be hindered by the fact that someone can compete in the same retail space for one-third of the cost, and their products are going to be 20 to 25 percent cheaper because of the difference in capital expenditures,” he said. “If I have a product on my shelf that’s 20 percent more expensive than a place two miles away, where is the person going to buy? It will take away our ability to sell to other establishments.”

While detailed plans for the distillery haven’t been established, Mr. Reifensnyder said it would sell a range of unusual vodka products, as well as artisan cheese from local dairy farms. To purchase the equipment, he has considered forming a consortium with local farmers and wine producers who would have access to the distillery.

Mr. Reifensnyder said he would apply for a grant only if he would allow farmers to use the facility.

“We would offer this to farmers who have grapes on vines to produce themselves.” he said.

JCIDA Deputy CEO David J. Zembiec said Clayton Distilling co-owner Michael L. Aubertine approached the agency with his business plan for the distillery in early March to apply for the USDA grant. Dark Island Spirits became incorporated May 17, after the grant funding for Clayton Distilling was announced.

“We don’t apply for funding for a project unless a business comes to us with a plan,” he said, adding that Mr. Reifensnyder has yet to do so. “We’re always asking businesses about what products they have in mind, but they’re not always familiar with all of the funding programs out there.”

Even with the distillery in Clayton, Mr. Zembiec still thinks Mr. Reifensnyder could move forward with his business plan, potentially applying for a USDA grant next year if the funding is available. He said Clayton Distilling’s application scored high with the USDA because it’s the first operation of its kind launched in the region.

He said the competition may help Mr. Reifensnyder’s business.

“We started with one winery here and now have a cluster of them, and I think the same could be possible with pursuing spirits and bourbons with distilleries. Now that you see the buzz and interest about the new industry, I think it’s to our benefit to have competition,” Mr. Zembiec said.

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