What Does John Know?

Today’s guest blogger on “What Do You Know?”, Ethan Smith, explores What Killed Michter’s?

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Was it because people, by 1990, no longer associated Pennsylvania with whiskey distilling? Maybe it was because whiskey consumption nationwide was declining? Or could it have been simply history closing the books on the last operating distillery in Penn’s woods? If you’re at all familiar with the distillery, you know well that the last days of Michter’s were not good ones. See Sam Komlenic’s post about his trip in 1989 and how empty the warehouses were. But what actually led to Michter’s shutting down on Valentine’s Day 20 years ago?

Doing a search for Michter’s online yields all sorts of results- most are inaccurate. I’ve found closure dates ranging from 1980 to 1992. And no one seems to fully understand why it closed. They only speculate. I set out several months ago to try and find out what made Michter’s tick and what made it finally wind to a stop (Being unemployed gave me PLENTY of time to do research!). I soon found myself involved with the distillery site itself helping the owner clean up and make the place look somewhat presentable. In our time working together at the abandoned place, Dwight began telling me what he knew and names he had heard. His stories about what happened to the distillery after its closure were fascinating and I quickly found myself scouring the internet for more information. I soon stumbled on a Straightbourbon post by Chuck Cowdery where he had interviewed Michter’s Master Distiller Dick Stoll. Within a few days, I had contact information and was on my way to meeting THE man who could answer a few questions I had. The first time I talked with Mr. Stoll we talked for a few hours. It was fantastic. We discussed everything from the process they used to make the whiskey, to the tourist business (His wife Elaine was a tour guide there), to what products they made, and of course, what killed Michter’s.

Louis Forman created the Michter’s brand back in the 1950’s by merging his two son’s names- Michael and Peter. Dick and Elaine Stoll wrote this to me about early distillery ownership:

“Lou [Forman] never owned the distillery.  In the early 1970s Samuel Glass and Associates bought the distillery from Kirk Foulk.  Sam Glass was the brother-in-law of Lou so Sam made him president.  Lou was the brains behind the Michter’s name and brand.  The plant was contracted by Hiram Walker to make cordials, who brought in new equipment, but the plant did not expand to the level expected. Hiram Walker ended the relationship and took back the equipment. 

“Around 1975(?)  Sam Glass sold the operation to a group of Lebanon businessmen including Stanley Katz, Phil Davis, Dale Yocum, and Abe Grosky (uncle of George Shattls).  Lou was named president, but Charles “Chuck” Romito, a lawyer from the law firm of Katz and Davis was put in charge. Under this group there was a new paint job and landscaping. Business started to boom with the help of Dale Yocum’s sons, Dave and Marty.  Lou was an important part of establishing the distillery on the National Register of Historic Places.  Dave and Marty established the Collectors Society and the tourist business.  The gift store items and decanters started with them, along with lots of press, including The Philadelphia Inquirer Magazine.  Lots of bus tours ended up at Michter’s on their way from the tourist areas of Lancaster to Hershey. 

“Eventually the Lebanon group sold the distillery to Theodore Veru [Around 1979] despite an offer from Austin-Nichols.  Veru’s higher offer won out.  Although the distillery made whiskey bottled as Wild Turkey in the 50s-60s for Austin-Nichols, they were not making it for them when they made the offer.”   Since whiskey drinking was declining, Austin-Nichols was looking to diversify their portfolio in hopes to make up profit where they were starting to lose it. Austin-Nichols was primarily interested in the deep wells on the property. So what did they want with these wells? Water of course. Lots of it. Pure, fresh, 54-degree limestone water. And what were they looking to do with all of it? Bottle it and sell it. Bottled water was just starting to get popular in the early 80’s and Austin-Nichols wanted a piece of the market. But since Veru’s bid was higher, we never got to enjoy bottles of pure limestone water from Michter’s.

Under the Yocum’s management, the distillery became a National Historic Landmark and a wonderful tourist destination. Then of course were the famous Michter’s decanters! Soon there were Michter’s T-shirts, balloons, aprons, ornaments, a Collectors Society, donkey rides for the kids, and many other retail items. But under that glamour and merchandise, there was trouble brewing. After the distillery had been sold to Veru, sales started to slump. Quickly. America lost its love affair with whiskey and the big glut was coming.

Veru had purchased a ceramic manufacturing plant in Ohio to design and manufacture the Michter’s decanters and named it GVI China but it too started to consume more money than it made. Dick said by around 1981, leaking barrels in the warehouses were no longer repaired and were just left to leak dry. The main distilling equipment was also no longer used on a continuous basis.

Then came the bankruptcy. Veru left the scene and the bank (Commonwealth bank, which later became Mellon Bank) took over. Well, sort of. Commonwealth Bank, according the Stoll’s “…Could not run it because they were loaning money to businesses that promoted alcohol, so they hired a holding company not to run the business, but to put a name on the “Business”.” According to Dick, most of these people really had no clue what they were doing and only tried to line their own pockets with the distillery’s meager profits. Finally a man by the name of Frank Pitassi came in and started running Michter’s. By that time, the main distilling equipment was not being used, but the mini pot still was still in use. Pitassi got a few contracts and they even exported some whiskey to Japan and Korea, but it wasn’t enough to keep the place afloat. And of course there was still the bank- who was holding all the debt AND all the bonds on the whiskey aging in the warehouses. Dick said supposedly the bank had asked Pitassi to buy the bonds from them since he was, after all, getting the profits off the distillery. Pitassi refused and on February, 14^th 1990, the bank got tired of not being paid and Pitassi made a phone call to shut Michter’s down until they were paid.

The bank payment never happened. Pitassi and all other interested parties vanished. Dick said a few people had come to look at the distillery in the following years, but soon the government got tired of waiting for their tax money and cleaned the place out. The bank sold the whiskey.  All the aging whiskey on site was rumored to be sent to Continental in Philadelphia and re-distilled into pure Ethanol.

So all that said, what led to the rapid decrease in sales of whiskey? First and foremost was, as I had mentioned before, America had fallen out of love with whiskey. Distillers no longer needed the little brown distillery in Schaefferstown to pick up the slack for them, so all the contracts evaporated, which really killed profit. Secondly, years of a lack of vision by management started catching up to the distillery. Veru lived very much for the “here and now” according to Dick, as did the people that followed him. The on-the-road sales team disappeared and suppliers started forgetting about Michter’s. Lastly, the market niche that Michter’s was aiming for was already very full. Jack Daniel’s, Maker’s Mark, and Wild Turkey were all priced lower than or in line with Michter’s and they had much larger names and distribution. And the whole decanter fad was starting to die off in the 80’s, too.

So there you have it. The last days of Pennsylvania’s last distiller, the oldest distillery in the United States, were sad, lonely times. But, if you ask Dick, and his wife Elaine, if they didn’t like working there, they will tell you they enjoyed it all. What hurt them was knowing the end of Michter’s was coming and there was little they could do about it. And don’t think Michter’s ever sacrificed the quality of their products through all of it. Dick said that every last drop that made it into their decanters and bottles was “good stuff.” And now we’re left to speculate about the future of the distillery. There has been interest in recent months from some parties about purchasing the distillery and restarting it- and with the popularity of small “craft” distilleries today, it could be an incredible distillery again. Oh, and it seems Americans have fallen back in love with whiskey again. So even though I couldn’t have my Michter’s open house back in February, it doesn’t mean we can’t still all raise a glass and salute the little distillery on Snitzel Creek.

 If you want to learn more about Michter’s and its history and/or its future, feel free to contact me at ethangsmith@dejazzd.com